While in the crypto-verse Ethereum has a good claim as a currency, according to the cryptocurrency marketplace analysis company Coin Metrics, stablecoins are challenging that notion. The growth of stablecoin is healthy, for the time being, for ETH.
It’s been now over a month that the stablecoin marketplace is reaching record levels and has over three billion in dollars on exchanges. Simultaneously, the release of stablecoins made by the ERC-20 model and stablecoin transfers on the Ethereum network is still growing.
The rise in stablecoins would potentially heighten demand for Ethereum since each stablecoin transfer requires ETH for transaction charges.
Stablecoins are more and more important for the crypto-verse, and lots of similar ventures are in motion. Moreover, lots of them are launched as ERC-20 tokens on ETH, and this could really set the ERC-20 as standard and build a network that will be harder to beat.
Stablecoins can reduce the money Ethereum premium.
This can happen as they are utilized more. They are challenging how we look at ETH in the crypto-verse as currency. They are not as volatile and can become store-of-value, a medium of exchange, a unit of account for cryptocurrency transfers, and smart contracts needing to store value. According to the report, this is occurring on the margin, seeing what is going on with MakerDAO putting USDC as a choice to be collateral in Dai loans
This week’s consensus is that stablecoin development is positive for Ethreum, but it’s going to be fascinating to see the changing effects of those opposing powers.
Additionally, Ryan Watkins, an analyst at cryptocurrency consultant Messari, feels this phenomenon is a challenge to Ethereum in the long run.
To protect its money premium, Ethereum must build demand for trust-minimized applications that utilize the coin as collateral, he said, adding that the currency can’t devolve into its early digital oil branding.
Coin Metrics states that stablecoins have earned $1b in marketplace capitalization since the start of the month, with much of the growth sill released on Ethereum (USDTETH) and stemming from Tether. Its marketplace capitalization grew from $4.43b on April 1 to $5.14b on April 19.
USDTETH still leads when we are talking about stablecoin transactions. Daily transactions for USDC, BUSD, and DAI reached a peak on March 18, but regular transactions for USDTETH and PAX carried on rising with USDTETH following from 83,000 switches daily to c in early November 2019 to 141,000 on 19 April. While BTC and Ethereum have far more frequent transfers, the count of USDTETH transactions has risen more quickly in the past 180 days than that of both these coins.