Stablecoin Market Review: Impact of USDC Crisis and Subsequent Changes

Recently, the US dollar stablecoin USDC is facing a liquidity crisis due to the collapse of a partner bank. Data shows that on March 11, the price of USDC fell to a low of 0.8788 USD, with a daily drop of over 12%. This decoupling also affected other stablecoins that use USDC as collateral, such as DAI and FRAX, which also experienced varying degrees of decoupling.

Although the USDC crisis was alleviated on March 13, this event still brought many changes and reflections to the stablecoin market as one of the previously most trusted stablecoins. Has the decoupling of centralized fiat stablecoins created opportunities for other types of stablecoins? Has there been a change in market stablecoin liquidity? Where did stablecoins mainly flow during the crisis? By analyzing the basic situation of stablecoins and market data from March 11-18, (, we found the following points:

1. The average market value of fiat stablecoins has risen across the board, while the average market value of crypto asset-based stablecoins has fallen across the board. This indicates that market confidence in fiat stablecoins remains relatively strong, while crypto asset-based stablecoins are more negatively affected.

2. Currently, the market value of USDC is about 47% of USDT, which is less than half. The market value of TUSD has increased by over 54%, the largest increase. The market values of USDT, DAI, LUSD, USDP, GUSD, FLEXUSD, USDD, and others have also seen growth.

3. On March 18, the exchange's stablecoin stock was approximately $21.461 billion, down 11.02% from the 11th, with a rapid outflow rate.

4. The total locked value of 13 major stablecoins in Uniswap v3, Curve, and AAVE v2 decreased from 3.464 billion USD on the 11th to 3.297 billion USD on the 18th, a decline of approximately 4.83%.

5. On March 11, the total trading volume of stablecoin trading pairs on decentralized exchanges reached 23.17 billion USD, far exceeding the average daily volume of around 1 billion USD at the beginning of the month. The transactions between these three stablecoins, USDC, USDT, and DAI, constituted the main liquidity pathway for stablecoins in DeFi during the crisis.

TUSD market value surges, the impact of the USDC crisis on other stablecoins varies

The depegging of USDC has led to significant fluctuations in its own market value as well as that of other stablecoins. From the changes in market value on the 11th compared to the 10th, major stablecoins showed more declines than increases. USDC's market value decreased by 2.5%, while SUSD, DOLA, MAI, and USTC were affected even more, with declines ranging from 2.8% to 5.0%. The market values of ALUSD, BUSD, FRAX, MIM, USDJ, and FPI also dropped, but to a lesser extent. In contrast, the market values of 9 other stablecoins increased on that day, with USDP seeing the largest increase of over 11%. DAI, FLEXUSD, LUSD, and TUSD had increases ranging from 1.0% to 3.5%.

The market value changes on the 18th mostly continued the trend from the 11th. The market values of the four stablecoins, USDT, TUSD, DAI, and LUSD, increased on the 18th compared to the 11th, with TUSD seeing the highest increase of over 54%, and USDT also rising by over 6%. The market values of the seven stablecoins, USDC, BUSD, MIM, SUSD, DOLA, USDX, and ALUSD, decreased on the 18th compared to the 11th, with MIM experiencing the largest drop of over 17%, and USDC also falling by over 14%. Some stablecoins, such as USDP, GUSD, FLEXUSD, and USDD, switched from rising to falling after the crisis.

From the average market value changes of various types of stablecoins over two time periods, the USDC crisis did not lead to a collective collapse of fiat stablecoins. In both the market value changes from the 10th to the 11th and from the 11th to the 18th, the average market value of six fiat stablecoins increased, with average increases of 1.83% and 2.41% respectively. This indicates that market confidence in fiat stablecoins remains relatively strong.

However, the USDC crisis continues to have a negative impact on crypto asset-backed stablecoins, especially those collateralized by USDC. During these two periods, the average market value of 9 crypto asset-backed stablecoins declined, with average declines of 0.74% and 1.42%, respectively.

Algorithm stablecoins have shown a certain degree of resilience during this crisis. Although the market capitalization of four algorithm stablecoins averaged a decrease of 1.26% from the 10th to the 11th, with the largest drop. However, from the 11th to the 18th, the average increased by 2.82%, with the largest increase.

![Data Review of the Stablecoin Market After the USDC Crisis: Stablecoin Purchasing Power Drops to Short-Term Low])https://img-cdn.gateio.im/webp-social/moments-5ac039c188812f1430c7d9be1933ae86.webp(

USDC market cap falls below half of USDT, fiat stablecoins still dominate

There are more than 100 types of stablecoins in the market, with a total market value of approximately 133.388 billion USD. As of March 18, USDT remains the "leader" among stablecoins, with a market value of about 76.74 billion USD. Following it is USDC, with a market value of about 36.03 billion USD. Together, their combined market value is 112.764 billion USD, accounting for approximately 85% of the total market value of stablecoins. After this crisis, the current market value of USDC is about 47% of USDT, which is less than half.

In addition to USDT and USDC, other stablecoins with a market capitalization exceeding $1 billion include BUSD, DAI, TUSD, and FRAX, which account for approximately 6.22%, 4.08%, 1.53%, and 0.78% of the total market capitalization of stablecoins, respectively. Those with a market capitalization over $100 million include USDP, USDD, GUSD, LUSD, USTC, MIM, and SUSD, while other stablecoins have market capitalizations ranging from $48 million to $88 million.

The main stablecoins can be divided into four major categories: fiat-backed stablecoins, crypto-asset-backed stablecoins, algorithmic stablecoins, and hybrid stablecoins that are backed by crypto assets and algorithms. Currently, the highest market capitalization is still held by fiat-backed stablecoins, but the largest number among high market cap stablecoins are crypto-asset-backed stablecoins, with a total of 9 types. It is worth noting that crypto-asset-backed stablecoins often also accept fiat-backed stablecoins as collateral.

Another new trend is that, in addition to Ethereum being the main chain that includes various major stablecoins such as USDC, DAI, and FRAX, other public chains have also seen the emergence of stablecoins with large market capitalizations. For example, due to transaction fee impacts, Tron has surpassed Ethereum to become the main chain for USDT, and it is also the main chain for TUSD, USDD, and USDJ. Additionally, there are also stablecoins with large market capitalizations on Optimism, Polygon, and Kava. The expansion of stablecoins as liquidity mediums across different public chains has positive implications for the DeFi development of each public chain.

![Data Review of the Stablecoin Market After the USDC Crisis: Stablecoin Purchasing Power Falls to Short-term Low])https://img-cdn.gateio.im/webp-social/moments-cb2ce83accc81be2fc9061d7671ad2b4.webp(

The supply of stablecoins on exchanges has decreased, and purchasing power has fallen to a short-term low.

The blockchain analysis company Chainalysis pointed out that during market turmoil, the outflow of funds from centralized exchanges often spikes, as users worry about the exchange's collapse leading to inaccessible funds. CryptoQuant's monitoring of the stablecoin inventory at exchanges corroborates this view.

Statistics show that on March 18, the exchange stablecoin supply was approximately USD 21.461 billion, down 11.02% from USD 24.120 billion on the day USDC depegged on March 11, with a rapid outflow. Interestingly, on March 11, the exchange stablecoin supply increased by 3.49% compared to March 10, adding USD 0.814 billion, which may be related to users exchanging stablecoins on the exchange for risk aversion on the 11th.

The recent stablecoin crisis has also impacted the purchasing power of stablecoins. The Stablecoin Supply Ratio (SSR) is a commonly used metric to measure the market's potential purchasing power, referring to the ratio of BTC's market capitalization to the total market capitalization of all stablecoins. A lower SSR indicates a more sufficient supply of stablecoins, stronger potential purchasing pressure, and a possibility of price increase.

As of March 18, the SSR is around 4, near the upper Bollinger Band (200, 2), and has increased by about 30% from 3.08 on the 11th, showing a significant rise recently. This is related to the recent rebound in BTC prices. Asset prices have rapidly increased in the short term, while the market capitalization of stablecoins has generally decreased due to the de-pegging crisis, leading to a slight rise in SSR and a decrease in actual purchasing power. This brings more uncertainty to the market's return to a bull market.

![Data Review of the Stablecoin Market After the USDC Crisis: Stablecoin Purchasing Power Drops to Short-Term Low])https://img-cdn.gateio.im/webp-social/moments-56987b81d2e06726c84e7c5a335ec41a.webp(

![Data Review of the Stablecoin Market After the USDC Crisis: Stablecoin Purchasing Power Drops to a Short-Term Low])https://img-cdn.gateio.im/webp-social/moments-6d87826d470d21d83ccb1c938b74c45e.webp(

DEX stablecoin trading volume surges, deposit and loan interest rates fall back to early-month levels

During the crisis, not only did stablecoins flow out of the exchanges in large quantities, but the total amount of stablecoins locked in the three DeFi protocols closely related to stablecoin trading (Uniswapv3, Curve, and AAVE v2) also decreased, although the extent was relatively small. The total amount of the 13 main stablecoins locked in these three DeFi protocols decreased from $3.464 billion on the 11th to $3.297 billion on the 18th, a decline of approximately 4.83%.

It is worth noting that on the 18th compared to the 11th, the locked amount of USDT in three DeFi protocols has significantly increased, rising over 94% in Uniswapv3 and nearly 40% in Curve. Meanwhile, the locked amount of USDC has decreased in both Uniswapv3 and Curve, and the decline is not small.

The locked amounts of FRAX, TUSD, SUSD, LUSD, MIM, USDD, and MAI have all decreased in these three protocols, with FRAX and TUSD seeing more than a 70% drop in locked amounts in AAVE v2. In contrast, the locked amounts of fiat stablecoins BUSD and GUSD have increased.

The types of stablecoin trading pairs in DEX can more accurately capture the recent flow of stablecoins in DeFi. On March 11, the total trading volume of stablecoin trading pairs in DEX reached $23.17 billion, far exceeding the average daily trading volume of around $1 billion at the beginning of the month. On that day, the trading volume of stablecoin trading pairs with other tokens also reached $7.99 billion, creating a small peak.

Overall, after USDC decoupled, trading between stablecoins became extremely active. On the 11th, the trading volume of USDC stablecoin pairs reached 10.43 billion USD, USDT reached 8.51 billion USD, and DAI was around 3.71 billion USD. The trading among these three stablecoins constituted the main liquidity path for stablecoins in DeFi during the crisis.

![Data Review of the Stablecoin Market After the USDC Crisis: Stablecoin Purchasing Power Drops to Short-Term Lows])https://img-cdn.gateio.im/webp-social/moments-16e786f95709153878b01b6c1f92f12f.webp(

![Data Review of the Stablecoin Market After the USDC Crisis: Stablecoin Purchasing Power Drops to Short-Term Low])https://img-cdn.gateio.im/webp-social/moments-b9765ee14da993d3a8f0ec5753e5e8c9.webp(

The de-pegging of USDC has also had a significant impact on the borrowing and lending rates in the lending market. The trends of borrowing and lending rates for USDC and DAI generally show a "V" shape, meaning that the changes in borrowing demand are comparable to or smaller than the changes in deposit scale, but relative fluctuations are not large. In contrast, the borrowing and lending rate trends for USDT, TUSD, GUSD, LUSD, and SUSD generally show a "Λ" shape, indicating that during a crisis, the change in borrowing demand is greater than the change in deposit scale, resulting in relatively insufficient liquidity. Currently, the borrowing and lending rates in the lending market have all returned to the levels seen at the beginning of the month.

![Data Review of the Stablecoin Market After the USDC Crisis: Stablecoin Purchasing Power Drops to Short-Term Low])https://img-cdn.gateio.im/webp-social/moments-bc9bc17efc843de1d3c9c4f685e9903d.webp(

Stablecoins are the main bridge between the crypto world and fiat currencies. Among them, the "components" that are more closely linked to the real world, such as regulated USD stablecoins, are more likely to become vulnerabilities in the system. However, precisely because of this, their ability to resist risks is stronger than purely upper-layer assets built in the crypto world, as centralized management can more effectively control such risks. This is also the reason why users maintain confidence in regulated fiat stablecoins, and it is also why stablecoins are attracting increasing attention from regulatory authorities.