• Wed. Jul 24th, 2024

Stablecoin Surge Outpaces DeFi in Q3 User Engagement

Walter Swift

ByWalter Swift

Nov 5, 2023

Tether, the predominant stablecoin, has seen a surge in investor activity in the third quarter, outperforming the decentralized finance (DeFi) sector, according to a recent report by QuickNode, which monitors blockchain network activity.

Stablecoin Dominance Amid Market Turmoil

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In the face of persistent market headwinds, stablecoins have increasingly become the asset of choice for investors, eclipsing the once-dominant DeFi sector. The latest data from QuickNode highlights this shift, with stablecoin network activity showing a 45% rise in active addresses and a 41% jump in transaction volume from Q1 to Q3.

On the flip side, the DeFi space has seen a downturn, with daily active addresses and transaction counts declining, suggesting a change in investor sentiment and strategy during turbulent economic times.

The USDT vs. USDC Race 

Stablecoins, particularly in Q3 2023, have not only outperformed DeFi protocols but have also seen an internal competitive landscape evolve, mainly between USDT and USDC. USDT remains at the forefront in terms of market presence, with an impressive 337,000 daily active addresses and 680,000 transactions on average per day. 

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USDC, despite leading in volume for the third quarter, faced challenges, including the SVB collapse and a minor de-pegging incident, contributing to a substantial 62% drop in its volume from the first to the third quarter. This shift underscores the dynamic nature of the stablecoin market and its significant role in the broader digital asset economy.

DEX Resilience

While 2023 has generally been tumultuous for the DeFi sector, Uniswap has emerged as a beacon of resilience. The collapse of Silicon Valley Bank, a seismic event for the financial and crypto sectors alike, unexpectedly bolstered Uniswap’s trading volume, indicating a flight to liquidity and reliability amidst market turmoil. This was attributed to a concentration of large-volume trades.

The platform’s uptick in user engagement is reflected in a 15% rise in active addresses and a 33% boost in transactions during the third quarter, positioning Uniswap as a standout performer in an otherwise retracting DeFi landscape.

Emerging Staking Trends in DeFi Ecosystem

As decentralized exchanges (DEXs) continue to capture the largest share of the DeFi ecosystem, there’s a notable trend that’s gaining traction: staking, and particularly, Liquid Staking. The third quarter of the year saw a significant increase in the total value of staked Ether, rising from 23.7 million to 27.2 million ETH. 

This growth is largely powered by the innovative concept of Liquid Staking, where participants receive a form of IOU tokens in return for their staked cryptocurrency.

One of the most prominent platforms in this space is Lido DAO, which offers users stETH tokens against their staked Ether, allowing them to simultaneously earn rewards and maintain liquidity for participation in other DeFi activities.

This model has proven increasingly popular, with Lido DAO commanding a substantial 32% share of the total staked Ether by Q3’s end. In terms of value, the protocol’s stake grew from $7.6 billion to $8.8 billion—a remarkable 16% increase, despite broader market challenges.

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Walter Swift

Walter Swift

Walter Swift is an adept crypto writer, known for his deep insights into the decentralized world. His pieces artfully break down complex blockchain topics, making them accessible to a broad audience. With a passion for emerging technologies, Walter's articles are a beacon for crypto enthusiasts and novices alike.

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