Can stablecoin supply measure Ethereum uptake?

Interest in the cryptocurrency market returned this fall, with Bitcoin and Ether breaking all of their previous highs a few weeks ago. But shortly after the breakout, the situation turned south and the market collapsed almost 25%. While many investors and traders are calling for an end to the bull market, stable coin mints continue to pump new capital into every corner of the cryptocurrency. Several billion dollars of funds were announced and institutional investors participated, perhaps for the first time in the short history of the asset class.

The growth in stablecoin supply is likely related to the Total Locked Value (TVL) of decentralized financing (DeFi) for two reasons:

• The new capital increases the pressure to buy crypto assets by artificially increasing the value of the TVL dollar.
• DeFi is expected to deploy new capital to generate trading fee income, loan revenue and derivatives in the chain.

While it can be argued that new entrants are coming to pull value and leave the market, this appears to be a fringe case. In early 2020, the supply of stablecoins was almost "just up", suggesting that consumers could sell on stablecoins but not leave the industry.

The biggest scenario for the bears is that today's most successful DeFi apps are used to constantly speculate about the future of cryptocurrencies rather than solving real-world problems. However, promising applications keep popping up involving market forecasts, gaming, 24/7 forex trading, and unsecured loans. Despite the short-term price movements, the adoption of Stable Coins and DeFi applications by funds, institutions and individuals is positive for the industry. Innovations in Ethereum will continue to connect DeFi to the outside world, and the coin's steady growth should continue to be a strong measure of adoption.

Also read: Five things you need to know about Twitter's new CEO Parag Agraval

Approved claims

• Rari Capital and Fei Protocol aim for a symbolic merger if each DAO can agree. BACKGROUND: The founders of both protocols believe they can create a DeFi powerhouse by combining a decentralized stable coin and money market. The integration of FEI's stablecoin with Rari Capital could provide available liquidity for lending, which will help stabilize periods of high demand.

 

• DyDx plans to offer gas-free Ethereum deposits to users of its platform. BACKGROUND: Fees even for transactions on the Ethereum base layer are prohibitive for many would-be DeFi users, and DyDx is trying to create an easier way to introduce new users. The news comes days after Binance decided to add support for withdrawals to Arbitrum.

 

• Ethereum privacy app and blender, Tornado Cash, seems ready for Arbitrum to use. BACKGROUND: With Tornado Cash, users can deposit ETH from one address and withdraw ETH from another account for privacy in the chain. This app is often used by DeFi exploits or hackers to hide traces of evidence. The Arbitrum integration will enable continued use of the Ethereum rollup so users can stay on Layer 2 and avoid high transaction fees.

 

• Twitter CEO and Bitcoin fan Jack Dorsey has stepped down and was replaced by Parag Agraval. BACKGROUND: While Dorsey is interested in cryptocurrencies, he is more interested in integrating Bitcoin into one of the largest social media networks. Agrawal is part of the crypto team at Twitter and can make connections between Ethereum and social media.