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    Data-driven Analysis of Stablecoin Functionality on Avalanche

    Introduction

    Stablecoins have become a focal point of concern within the blockchain ecosystem, a concern accentuated by the depegging of UST and the subsequent collapse of the Terra blockchain. However, numerous projects continue to emerge, centering their efforts around stablecoins.

    In a recent article, Caesar identified a lack of consensus in understanding crucial aspects of stablecoins, resulting in uncertainty regarding project directions. They posit that the fundamental question for any stablecoin project revolves around the value proposition of stablecoins. To address this, they offer a theoretical analysis and propose a framework for comprehending this question, which they term "stablecoin functionality."

    According to Casaer, stablecoins should serve five primary functions:

    • Medium of Exchange
    • Store of Value/Peg Stability
    • Capital Efficiency
    • Fiat On-Ramp/Off-Ramp
    • Censorship Resistance

    Building upon this discussion, this dashboard seeks to analyze two significant projects, USDC and USDT, and assess how they function, specifically within the Avalanche blockchain, using available on-chain data.

    The overarching objective of this dashboard is to contribute to this ongoing discussion by providing data-driven insights.

    • For the further discussion, please refer to this X-thread.
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    Method

    This dashboard employs Cesear's stablecoin functionality framework and attempts to provide data on three out of five functions identified.

    To assess the functioning as a medium of exchange, we will analyze stablecoin transfers and stablecoin swaps. To gain insights into the store of value aspect, we will examine the peg stability of the two selected projects. We will also survey and present information on the pools that offer stablecoin yield for further investigations. Lastly, we will investigate the role of stablecoins as fiat on/off-ramps by providing an overview of the flow of stablecoins between centralized exchanges (CEXs) and blockchain networks.

    For the purpose of this analysis, we have utilized Flipside's Avalanche Schema.

    Please note that within the text, "SC" has occasionally been used as an abbreviation for "stablecoins."

    Note on the image

    The image was generated using AI with Picsart and edited using Fotor

    It draws inspiration from the Monet style and the perception of Avalanche.

    More about the Author

    Twitter: @SocioCrypto | Discord: SocioCrypto | Flipside Profile: https://flipsidecrypto.xyz/SocioCrypto

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