When examining the Defi space, several aspects and metrics may confuse newcomers. It is now possible to look at the tokenized US Dollars in DeFi on Ethereum, offering fascinating insights. Custodial solutions remain very popular.
Custodial Tokenized US Dollars Reign Supreme
With all of the value flowing through decentralized projects on Ethereum, many people would stop to consider how much of this value comes from stablecoins. Despite numerous platforms supporting other assets, it is evident where the real “power” lies. Both custodial and collateralized stablecoins make a significant impact on Ethereum DeFi today.
According to DeFi Pulse, there is clear favoritism toward custodial tokenized US Dollars. USDT, USDC, BUSD, PAX, HUSD, TUSD, and GUSD are all custodial solutions. They combine for a total of $32.4181 billion in Ethereum DeFi today. Considering how just under $35 billion worth of tokenized US Dollars resides in this ecosystem, it is evident that collateralized stablecoins have yet to gain traction.
Of the custodial solutions, Tether’s USDT and Circle’s USDC have a clear market lead over Binance’s BUSD. PAX and TUSD, two of the “older” custodial options on the market, have yet to come close to these levels of adoption. Despite numerous DeFi platforms supporting multiple options for tokenized US Dollars, most users will flock to the same option time and time again.
Gaining a foothold in the DeFi segment may be crucial for some of these stablecoins to survive. If there is little or no interest in using a pegged asset in this competitive space, one has to wonder if there is any future at all. For collateralized pegged currencies, the road ahead will not be easy either. SUSD, MUSD, and DUSD all fail to note any real rate of adoption today.
What About Other DeFi Tokens?
It is not hard to see that, without tokenized US Dollars, the DeFi landscape would look very different today. As the industry represents a $38.82 billion pool of Total Value Locked, $34.99 billion comes from stablecoins. That leaves just $3.83 billion in “other tokens” users are willing to deposit into these platforms, either for DEXes, lending, or otherwise.
Considering how the top 3 Ethereum DeFi projects by TVL are all lending platforms, the stablecoin dominance isn’t surprising. It often requires an asset like USDT, USDC, or DAI to obtain a loan. There is no real demand for any other assets in this space outside of a few potential yield farming opportunities. That may not necessarily bode well for all of the platforms creating their own tokens.
A year from today, these statistics will undoubtedly look very different. Stablecoins are likely to become even more dominant in the broader cryptocurrency space. What that means for Ethereum DeFi is impossible to predict. Tokenized US Dollars make this industry go-’round, which may or may not be a good thing.