USDC on Solana Through it All (November)
Introduction to Solana
- Solana is Layer 1 blockchain networks, like Bitcoin, Ethereum, Litecoin, Algorand and Avalanche.
- Layer 1 network is a blockchain in the decentralised ecosystem where smart contracts can be deployed onto, whereas a Layer 2 protocol is a third-party integration that may be used in conjunction with a Layer 1 blockchain.
- As the core networks of their ecosystem, Layer 1 refers to a simple base blockchain network. Decentralized apps are built on top of Layer 1s by developers. Consider the internet to be an Layer 1, and Instagram to be one of the apps built on the internet.
Introduction to Stablecoins
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Stablecoins are cryptocurrencies that are pegged to the value of 1 US dollar.
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They gain price stability by holding reserve assets as collateral or by employing algorithmic formulas designed to control supply.
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Besides, on September 5th 2022, the largest centralised exchange (CEX) - Binance announced that it will temporarily suspend USDC deposits on the Solana chain and USDC deposits was resumed on November 23rd.
More information about this here.
Methodology
- FTX meltdown period that happened on from November 7th to November 14th and Binance suspension of USDC on Solana have impacted the Solana Chain and USDC negatively. In this dashboard, we will first look at USDC’s swap and transfer volume since November 1st, to determine how USDC’s activity have been affected by the recent Solana events. We will also look at the look at Ethereum’s and Solana's monthly stablecoin activity since January 1st to determine to which stablecoins gain market share on these 2 blockchains.
- Analysis in this dashboard starts from June 1st 2022.
- Stablecoin transfer activty on Solana is obtained using the solana.core.fact_transfers table. Swap activity on Ethereum and Solana are obtained using the ethereum.core.ez_dex_swaps and solana.core.fact_swaps table.
- USDC contract address on Solana is EPjFWdd5AufqSSqeM2qN1xzybapC8G4wEGGkZwyTDt1v.
Sections in this Dashboard
- Daily USDC Swap and Transfer Volume on Solana (in USDC)
- Daily Stablecoin Swap and Transfer Volume on Solana (in USD)
- Stablecoin Swap From Volume on Ethereum and Solana
- Stablecoin Swap To Volume on Ethereum and Solana
- Stablecoin Total Swap Volume on Ethereum and Solana
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- The bar charts above show Ethereum and Solana stablecoins swap from volume per month (in USD).
- Since January 1st to the present, USDC has had the highest monthly swap from volume on both Ethereum and Solana, followed by USDT.
- On January 2022 and May 2022 (when UST depegs), we see an increase in total swap volume on Ethereum and Solana stablecoins.
- On Ethereum, USDC, USDT, and DAI dominate stablecoin swap from volume, whereas only USDC and USDT dominate stablecoin swap from volume on Solana.
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- The bar charts above show Ethereum and Solana stablecoins swap to volume per month (in USD).
- Similar to the previous section, USDC has the highest swap to volume on Solana every month except January 2022, when USDT has the highest swap to volume.
- USDC has had the highest monthly swap to volume on both Ethereum and Solana since January 1, 2022, followed by USDT.
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Stablecoin Swap From Volume on Ethereum and Solana
Stablecoin Swap To Volume on Ethereum and Solana
Stablecoin Total Swap Volume on Ethereum and Solana
- The bar charts above show Ethereum and Solana stablecoins total swap volume per month (in USD).
- USDT is unquestionably the most popular stablecoin on both Ethereum and Solana.
- On Ethereum and Solana, it appears that collaterised stablecoins are more popular with users than algorithmic stablecoins. This could be due to the fact that algorithmic stablecoins have lower peg stability because they do not rely on collateral to keep their peg.
- Collateralized and decentralised stablecoins like DAI are overcollateralized by other assets like Ethereum to ensure peg stability.
- USDC and USDT, on the other hand, are fiat-backed stablecoins that are very stable and reliable as long as the issuer is trustworthy and transparent.
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Conclusion
- The volume of USDC swaps and transfers peaked during FTX's meltdown week, which lasted from November 7th to November 14th.
- The most popular stablecoin on Solana remains USDC, and the suspension of USDC by Binance has not shifted users to other stablecoins on Solana.
- USDC, USDT, and DAI dominate stablecoin swap from volume on Ethereum, whereas only USDC and USDT dominate stablecoin swap from volume on Solana.
- Since January 1, 2022, USDC has had the highest monthly swap to volume on both Ethereum and Solana, followed by USDT.
- USDT is without a doubt the most widely used stablecoin on both Ethereum and Solana.
- Users appear to prefer collaterised stablecoins over algorithmic stablecoins on Ethereum and Solana
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Daily Stablecoin Swap and Transfer Volume on Solana (in USD)
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Daily USDC Swap and Transfer Volume on Solana (in USDC)
- USDC swap and transfer volume were at their peak during FTX's meltdown week, which lasted from November 7th to November 14th.
- This is appropriate because USDC holders on FTX may want to transfer their USDC to a cold wallet during the meltdown, or swap to/from USDC in order to profit/protect themselves from the meltdown.
- Following the FTX meltdown, swapping and transfer volume have remained low and flat.
- Could Binance's suspension of USDC has directed users to other stablecoins on Solana? Let us find out.
- Since November 12th, 2022, stablecoin swap and transfer volume has been low.
- Despite the fact that USDC has been suspended on USDC, we can see that in November 2022, USDC has consistently been the stablecoin with the highest swap volume and transfers volume on Solana.
- USDC remains the most popular stablecoin on Solana, and the suspension of USDC by Binance has not shifted users to other stablecoins on Solana.