Stablecoins play a pivotal role in the crypto ecosystem, serving as a cornerstone for trading, lending, asset management, and other financial activities. With a total market capitalization of $124.4 billion, stablecoins account for 8.5% of the entire cryptocurrency market, underscoring their significance.
While centralized, fiat-backed stablecoins like USDT and USDC dominate the market, recent months have seen heightened competition with the emergence of innovative models—collateralized debt position (CDP) stablecoins, LST-backed stablecoins, and new centralized entrants.
This report examines key players such as:
- GHO (Aave)
- crvUSD (Curve)
- eUSD (Lybra)
- PYUSD (PayPal)
- FDUSD (First Digital)
Market Overview
Dominance of Centralized Stablecoins
Top centralized stablecoins (USDT, USDC, BUSD, TUSD) collectively hold 92% of the market share. Notably:
- Tether (USDT) leads with 66% dominance, despite minor depegging events.
- USDC and BUSD have seen declining shares due to regulatory pressures.
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Emerging Contenders
1. CDP Stablecoins
Collateralized Debt Position (CDP) models enable users to mint stablecoins against crypto collateral (e.g., ETH).
crvUSD (Curve Finance)
- Launch: May 2023
- Mechanism: Soft liquidation via LLAMMA (Loan Liquidation AMM Algorithm).
Adoption:
- Debt: $104.8M
- TVL: $162.4M
- Supported collateral: wstETH (44%), WBTC (32%).
GHO (Aave)
- Interest Rate: Fixed at 1.51% (below competitors).
- Circulating Supply: 23.4M GHO (~501 holders).
- Unique Feature: Deposited collateral continues earning yield.
2. LST-Backed Stablecoins
Liquid Staking Tokens (LSTs) like stETH back these stablecoins, offering yield-bearing features.
eUSD (Lybra)
- APY: 7–8% (from stETH rewards).
- Circulating Supply: 170M eUSD (827 holders).
- Collateral Ratio: 190% (healthy overcollateralization).
R (Raft)
- Collateral: stETH/rETH (120% minimum ratio).
- Growth: $24.5M circulating supply (661 holders).
3. Centralized Stablecoins
PYUSD (PayPal)
- Backing: Fully reserved by USD deposits + Treasuries.
- Target Audience: PayPal’s 431M active accounts.
- Risks: Centralization concerns (freezing capability).
FDUSD (First Digital)
- Growth: 10x surge in August 2023 ($312M market cap).
- Driver: Zero-fee BTC/FDUSD trading on Binance.
Key Market Developments
MakerDAO’s Enhanced DSR
- Raised DAI savings rate to 8% (now 5%).
- DAI supply rebounded 16% from lows.
Real-World Asset (RWA) Integration
- 24B RWA exposure by MakerDAO (~58% of revenue).
LST Adoption Surge
- Projects like Prisma, Gravita, and Ethena launching LST-backed stablecoins.
FAQs
Q1: How do CDP stablecoins maintain stability?
A: Through overcollateralization (e.g., $1.5 stETH backing $1 eUSD) and liquidation mechanisms.
Q2: Why is PYUSD significant?
A: It bridges Web2 (PayPal users) and crypto, though adoption hinges on non-crypto natives.
Q3: What risks do LST-backed stablecoins carry?
A: Yield volatility tied to ETH staking returns and smart contract vulnerabilities.
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Conclusion
The stablecoin market remains dynamic, with centralized giants facing competition from decentralized innovators. While scaling challenges persist, diversification in collateral (LSTs, RWAs) and yield mechanisms signals long-term evolution.
Final Word: Expect fragmentation, not displacement—new entrants will carve niches alongside incumbents.