About the editor: Spencer Noon is Co-founder & General Partner at Variant Fund. Web3 founder or data analyst looking to connect? Reply back to this email.

On-chain coverage of stablecoins including USDC, DAI, and NOTE.

• After settling a record $8T in 2022, stablecoins are once again moving significant amounts of value around on public blockchains in 2023. Coin Metrics recorded just over $1.2T of adjusted on-chain volume in January and February, with USDC settling $528B and Tether settling $641B.

• While on-chain volume remains strong, the regulatory discussion is heating up. Since Paxos was directed to halt minting of Binance’s BUSD, the supply of BUSD has fallen $6B, down to $10B. Meanwhile, USDC supply has risen about $2B and has gained a market share of 45% on ETH, its highest since 2019.

• Tether’s instantiation on the low-fee Tron Network continues to see signs of increased adoption, with the total number of addresses holding USDT on Tron recently surpassing 20M. The distribution of total Tether on Tron has reached an all-time high of 55% with $39B on Tron and $30B on Ethereum.

• USDC (USD Coin) is a stablecoin created by Circle. Its supply has grown rapidly from less than 5B in January 2021 to nearly 50B in January 2022, reflecting the growing demand for stablecoins. USDC is the second largest stablecoin by supply, only behind USDT. Its popularity is due to its transparent and auditable reserve system. The recent drop in supply to around 40B since the start of 2022 highlights the continued adoption of USDC by individuals and businesses.

• USDC transfer volume on Ethereum has seen a remarkable rise, surging from under $25B monthly in 2020 to its all-time high of nearly $600B in November 2022. This phenomenal growth showcases the increasing adoption of USDC as a reliable and secure means of payment and transfer of value.

• Over 50% of USDC holders hold less than 10 USDC. Only 10-15% hold over a thousand USDC, with those holding over a million USDC making up less than 1% of all holders. This highlights democratization of finance and different use cases for USDC, from store of value to means of payment.

• Over the past 12 months, DAI supply has fallen ~46% from about 9.8B to 5.2B. A chunk of this reduction came from wstETH vaults. Shortly after the initial drop in May 2022, the ratio of DAI backed by other stablecoins rose to ~84%. Since the fall of 2022, this has now fallen back down to ~64%. About 2B of this DAI is backed by USDC and another ~$917M from PAX and GUSD collectively. In the past 12 months DAI from the PSM has fallen from ~5.9B to ~2.9B. ~66% of the DAI supply is over 12 months old.

• The majority of stability fees generated by the DAI supply have been coming from real world asset vaults at ~$23M annualized projections, with the PSM in 2nd at ~7M annualized and ETH vaults in 3rd at ~3M annualized. The most popular ETH vaults are the low fee (170% CR) and balanced (145% CR), ie lower liquidation risk vaults.

• DAI on L2s/bridges fell from a little less than ~2B a year ago to ~500M today. In the past few months, the percent of DAI on Optimism has steadily grown to ~14.4%. The amount of DAI on Avalanche has dropped from ~60% to ~11% in the past year. The amount on Arbitrum has increased slightly in that time.

• Canto is a Layer-1 blockchain delivering core DeFi primitives as public utility protocols, or Free Public Infrastructure (FPI). NOTE, a fully decentralized, over-collateralized, and automated stablecoin backed by M1 assets on Canto, has witnessed a 138% YTD growth in TVL. In addition, NOTE’s peak 24H volume reached 127.8M in February.

  

  

• Since the beginning of 2023, the TVL of all NOTE LPs on Canto’s DEX have increased over 100%. Specifically, the NOTE-wCANTO pair encountered the biggest growth with 300% YTD at 26M TVL. The NOTE-USDT and NOTE-USDC pairs followed by an increase in TVL with 120%, and 112%, respectively.

  

• A total of 47.8M NOTE has been borrowed from the lending market. Breaking down the stats, 47.5M NOTE has been supplied by 173 suppliers, leading to average supply per user at approximately 275k NOTE. Also, the peak 24 hr borrow and supply volume reached to 6.9M and 7.9M NOTE, respectively.