Stablecoins play a critical role in the crypto ecosystem, with widespread use across trading, lending, asset management, and numerous other functions. With a market capitalization of US$124.4B, stablecoins make up 8.5% of the entire crypto market capitalization, a testament to their importance in the space.
While centralized, fiat-backed stablecoins dominate the space and will likely remain so for the foreseeable future, the competition has heated up in recent months as new players enter the market.
The emergence of collateralized debt position (“CDP”) stablecoins, stablecoins backed by liquid staking tokens (“LSTs”), and other centralized stablecoins has come at a time when interest in stablecoins is on the rise and as projects try to compete for a piece of the market.
In this report, we examined projects such as Aave’s GHO, Curve’s crvUSD, Lybra’s eUSD, Raft’s R, Paypal’s PYUSD, and First Digital’s FDUSD to get a sense of the mechanics and adoption of some of the recently launched stablecoins.
Considering the fluidity of the market, we have also highlighted some recent developments and observations, which include MakerDAO’s Enhanced DAI Savings Rate, the integration of real-world assets, and the adoption of LSTs by an increased number of projects.
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