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Happy Friday! This is the second edition of the new Friday format.
Today we dive into stablecoins, examine the past month’s activity, and hear from Circle CEO Jeremy Allaire.
I hope you had a relaxing weekend. But before you start enjoying the last days of summer, don’t miss our survey at the end.
— Katharine Ross & David Kanellis
up, up, up
Earlier this week, we briefly mentioned that stablecoin market capitalization was at an all-time high.
CCData noted that the nearly 3% rise from August marked the “highest month-end market cap” since April 2022 (oh, those were the days…).
Source: CCData
However, it’s not all good news, as there were some issues as well.
“Stablecoin trading volume in August decreased by 14.2% to $848 (billion) (as of the 23rd). (Overall) trading volume is on an upward trajectory for the second consecutive month, driven by the unwinding of Japanese yen carry trades and volatile digital asset prices as the TradFi market recovers,” CCData analysts said. I’m writing.
Check out the volume from August of last year to now.
Remember when I mentioned my chat with Polygon’s Colin Butler earlier? Stablecoins have actually come up a few times.
At one point, I asked Butler which types of cryptocurrency products have the highest market value, considering it’s no secret that stablecoins are considered to be quite successful. I asked.
Butler went on to comment as follows: “What we have now is an on-chain money market fund, which obviously is not equivalent to a stablecoin, right? But it could function as a payment token depending on the use case. I don’t think anyone knows how deeply it has penetrated into finance.”
“I don’t think we’ll know until people actually try it, and it could go on forever. It could overlap with the tether at some point or reverse the tether,” he continued. Ta. “Or it could be that there are structural issues that prevent us from adapting such a product to market for some reason. I think we’ll find out very quickly within the next 12 months.”
Also interesting is the sudden rise seen in PayPal’s stablecoin. According to CCData, PYUSD’s market capitalization rose 56% last month.
According to data from DeFiLlama, PYUSD currently sits at just under $1 billion in market cap after reaching that milestone earlier this month. It is the 6th largest stablecoin by market capitalization.
Unfortunately, I’m not a chart guru like David, but CCData can help.
“The recent surge in demand can be attributed to the attractive incentives offered by PYUSD’s decentralized lending protocol. Dapps including Drift Protocol offer up to 18% annualized yield.” On-chain data indicates that more than 50% of PYUSD is serving as collateral for DEX lending protocols and market pairs,” CCData analysts wrote.
Our colleague and Lightspeed Newsletter writer Jack Kubinek pointed out that PayPal will have to pick up some of the costs as it takes off. Perhaps that explains some of the success we’re seeing in the data.
But PayPal isn’t the only stablecoin I want to cover this morning. I would also like to mention USDC.
In August, USDC’s market capitalization increased by 3% to approximately $34 billion. It outperformed Tether (the clear ruler when we talk about this sector) slightly, gaining 2.5% to a market cap of $117 billion, leaving it well ahead of the rest of the market.
USDC growth aside, stablecoins are still one of the things that I’m getting a lot of attention from, and one of the reasons for that is that its operator, Circle, is still aiming to go public. In January, the company secretly filed for an IPO. Essentially, Circle filed a registration statement with the SEC under seal. I mean, neither you nor I can see it…yet.
And no matter how hard I try, dear reader, I can’t shake off my Wall Street roots. Admittedly, I’m excited to keep an eye on S-1 and find out more about Circle ahead of its public debut.
Unfortunately, you may have to wait a while longer. Circle did not respond to a request for comment on the status of its process. In an interview on the Empire podcast (which we’ll get to in a moment), CEO Jeremy Allaire just said the company “remains very focused on becoming a global U.S. public company.” .
“A publicly traded U.S. company will increase trust, increase transparency, and hold us to the highest standards of governance, ethics, and forms of public accountability that can exist for any company in the world. It’s priceless,” Allaire added.
But while Circle’s timeline remains unclear, what we do know is that the stablecoin segment continues to grow even as parts of the market appear to be stagnant. It means that it is.
— Katherine Ross
IYKYK
Speaking of circles…
This week’s episode of Empire featured Jason Janowitz, Santiago Santos, and Allaire and covered much more than just IPOs.
Allaire spoke to listeners about his hopes and dreams (i.e. 5-10 year vision) for Circle, and stablecoins in general.
“What’s really exciting is what actually happens when machines can mediate value exchanges. Commercial relationships, transactional relationships, labor relationships, financial relationships can be codified,” Allaire said. he explained. “And it is deployed in the form of smart contracts on an open, public, transparent computing infrastructure, (aka) a public blockchain.”
For Allaire, this is a “fundamental” advancement in blockchain.
And now you know.
There is no doubt that RWA has room to grow.
Counting stablecoins, the total value of this segment is now around $182.28 billion, just $5 billion short of the lifetime high set just before Terra exploded in May 2022.
Circle now accounts for almost 20% of the total, while Tether still accounts for more than half.
I would like to see tokenized real estate appear in the chart above over the next few years.
In that corner of RWA, a few projects are slowly picking up speed, but overall they are still too small to stand out. Perhaps even more so after the potential boost from what the Trump family has in store.
— David Kanellis & Katherine Ross
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