Stablecoin Activity Takes Crown From DeFi in Q3: Report

Stablecoins are often viewed as assets that pose systematic risks to the financial market. However, these pegged tokens have become the most popular category among investors amid adverse market conditions.

QuickNode’s latest on-chain report revealed a notable surge in stablecoin activity across blockchain networks.

Stablecoins saw a 45% growth in active addresses and a 41% increase in transactions between the first and third quarters. Contrastingly, DeFi experienced significant drops in daily active addresses and transactions. Moreover, these protocols went from having over 1 million daily average transactions in the first quarter to 786,000 in the third quarter.

Stablecoin’s Growing Appeal to Investors

It wasn’t until July that stablecoins solidified dominance in the market with transactions surpassing those of DeFi protocols on various blockchain networks, including Ethereum, Arbitrum, Polygon, Optimism, and more. In Q3 2023, stablecoins eclipsed other categories, boasting over 400,000 daily active addresses, making it the sole category to exhibit growth.

QuickNode’s report shared with CryptoPotato,

“Stablecoins are the dominant player in terms of daily active users. They have eclipsed even the likes of DeFi, which has been the traditional stronghold in previous years. The rise can be attributed to the inherent stability and value predictability that stablecoins offer, making them an attractive entry point for both new and seasoned users.”

USDT continues to lead the stablecoin space in terms of market capitalization, active addresses, and transaction activity. It concluded Q3 with an average of 337,000 daily active addresses while its transactions averaged at 680,000 daily.

Even as USDC maintains a lead over USDT in terms of volume for the third quarter, the analysis suggests that the gap has notably shrunk since Q1, primarily due to Silicon Valley Bank’s (SVB) collapse and USDC’s slight de-pegging of about $0.03.

Meanwhile, USDC experienced a significant volume decline, with a 62% decrease from Q1 to Q3.

Uniswap Thrives in Q3

2023 hasn’t been kind to DeFi. The report found that Uniswap is the only DEX that has maintained stability since Q1 2023, despite a significant event when Silicon Valley Bank (SVB) collapsed. This collapse resulted in a substantial increase in the platform’s trading volume, primarily driven by a few large-volume transactions, rather than a surge in the number of transactions or active addresses.

Notably, Uniswap is the only DEX that experienced a 15% growth in active addresses and a 33% increase in transaction count during Q3, diverging from the broader DeFi trend.

Despite the continued dominance of DEXs within the DeFi subcategory, staking is gaining momentum, in yet another interesting trend.

In Q3, the total staked Ether increased from 23.7 million to 27.2 million, with 37% of this attributed to Liquid Staking – a concept that resembles distributing IOU tokens in exchange for staked assets.

Users depositing Ether in Lido DAO’s protocol receive stETH tokens, enabling them to participate in DeFi while earning ETH rewards. By the end of Q3, Lido held 32% of the staked ETH, with its value growing from $7.6 billion to $8.8 billion, marking a 16% increase.