The DeFi on EOS continues to heat up, and Tether has issued 75 million USDT on EOS, with a total circulation of 90.25 million.
Original title: “MYKEY Stablecoin Report 17: The market value of stablecoins rose to 17.544 billion US dollars; decentralized payment protocol Celo”
Written by: Jiang Haibo
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- At present, the market value of major stablecoins in circulation has reached 17.544 billion U.S. dollars, an increase of 981 million U.S. dollars compared with last week.
- In the past week, Tether has issued an additional 270 million USDT on Ethereum and 500 million USDT on Tron.
- The DeFi on EOS continued to heat up. On September 4, Tether issued additional 25 million USDT on EOS, and continued to issue 50 million USDT on September 5. USDT’s circulation on EOS reached 90.25 million.
- Celo has special features in address-based encryption schemes, reserve assets, and shared reserves.
- The market value of CELO has reached 423 million US dollars, while the circulation of cUSD is only 7.33 million.
Overview of stablecoin data
Let us first review the changes in the basic information of each stable currency in the past week (August 29, 2020-September 4, 2020, the same below).
Market circulation
Source: MYKEY, CoinMarketCap, Coin Metrics
At present, the market value of major stablecoins in circulation has reached 17.544 billion U.S. dollars, an increase of 981 million U.S. dollars compared with last week.
Source: MYKEY, Coin Metrics
In the past week, Tether has issued an additional 270 million USDT on Ethereum and 500 million USDT on Tron. The circulating volume of USDC, PAX, HUSD, DAI, and GUSD increased by 230 million, 10.91 million, 5.85 million, 19.16 million, and 650,000 respectively; the circulating volume of BUSD and TUSD decreased by 2.69 million and 52.21 million, respectively.
Number of holding addresses
Source: MYKEY, DeBank
Last week, the number of main stablecoin holding addresses in the Ethereum network increased, increasing by 142707 in total.
Source: MYKEY, DeBank
The number of USDT, USDC, PAX, TUSD, DAI holding addresses increased by 129,348, 8210, 216, 582, and 4351 respectively.
Number of active addresses
Source: MYKEY, Coin Metrics
Last week, the number of daily active addresses of major stablecoins dropped by 1.15% on average from the previous week.
24 hours on-chain transactions
Source: MYKEY, Coin Metrics
Compared with the previous week, the number of daily transactions of major stablecoins increased by 12.01% on average.
24-hour on-chain transaction volume
Source: MYKEY, Coin Metrics
Source: MYKEY, Coin Metrics
The average daily transaction volume of major stablecoins increased by an average of 12.05% from the previous week.
Decentralized payment protocol Celo
The stable currency in the blockchain combines the advantages of digital currency and can maintain price stability. The payment market has a very broad prospect and is an area that many people are optimistic about. The decentralized payment protocol Celo contains stablecoins that can be used for payment, which is mainly used in mobile payment systems. Celo is based on the two core values of “special purpose” and “connection”. Its pronunciation /ˈtselo/ means “purpose” in Esperanto. In this report, we will introduce to you the differences of Celo.
Address-based encryption
With the development of stablecoins, USDT and USDC with stable value gradually replaced Bitcoin’s “point-to-point payment” function. When using these stable coins for payment or transfer, we must first know the address of the other party, which increases the threshold for the use of stable coins.
Celo proposed an address-based encryption scheme. The user generates a public/private key pair in the traditional way, and then registers his public key to a public database, which stores the [address->public key] tuple. Users can attach any character string to the address of the database key, and each address can store multiple public keys. Through this agreement, users can use e-mail addresses, mobile phone numbers, etc. as public keys, but need to be able to receive secure messages.
In the digital currency wallet disclosed by China Construction Bank last month, the digital renminbi also has a similar function, which can be transferred through the other party’s wallet address or bank account.
Price stabilization mechanism
There are two types of tokens in the Celo protocol. One is the reserve token CELO (formerly Celo Gold), and the other is the stable currency Celo USD (cUSD, Celo US dollar) used for payment. Although the stablecoin cUSD is also supplied flexibly, unlike Ampleforth, Celo only maintains the value of cUSD by adjusting the total supply of cUSD, without changing the number of stablecoins held by users. When the price of cUSD is higher than 1 U.S. dollar, arbitrageurs can buy CELO for 1 U.S. dollar, exchange it for 1 cUSD, and sell it on the market. When cUSD is lower than 1 USD, arbitrageurs can buy cUSD and exchange it for 1 USD CELO.
Diversity of stored assets
In MakerDAO, the tokens selected by the holders of MKR through voting, such as ETH, WBTC, etc., are mortgaged; while Synthetix is used for mortgage of its own native token SNX. Celo’s reserve assets include not only the native token CELO, but also commonly used cryptocurrencies such as BTC, ETH, DAI, etc., which increases the diversity of mortgage assets and makes it easier to expand the scale of cUSD. Initially, the Celo reserve target was 50% CELO, 30% BTC, 15% ETH, and 5% stablecoin.
Source: celo.org
Shared reserve system
At present, there is only cUSD as a stable currency in Celo, but Celo positions itself as a multi-asset encryption protocol for decentralized payments and introduces a shared reserve system. For example, when the agreement is to introduce the Celo Euro pegged to the Euro, the Celo Euro and Celo USD use the same reserve. When the supply of stablecoins expands, the agreement issues new stablecoins and uses them to purchase a basket of encrypted assets. When the demand for stablecoins shrinks, the agreement uses the same mechanism to sell reserve assets for stablecoins. CELO has played the role of a central bank in traditional finance, maintaining stable currency prices through open market operations.
The shared reserve system can also improve process efficiency. For example, when the demand for Celo euros decreases, before preparing to sell reserves, it will first check whether the supply of Celo US dollars needs to be expanded. If necessary, Celo USD will be issued and directly converted into Celo Euro at the current exchange rate.
The shared reserve system does not require all new stablecoins to be used. The Celo protocol also allows the use of its own reserves to issue new tokens. When using the shared reserve system to introduce a new stable currency, thorough consideration must be made. If a stable currency with negative effects on the ecosystem is introduced, it may have a marginal negative impact on the stability of other currencies. Only when people generally expect that the introduction of new stablecoins will increase the long-term demand for the monetary system, will they be considered.
The value of CELO
CELO is also the governance and incentive token of the Celo protocol. Holding CELO will enjoy the benefits of network growth.
As the use of Celo increases and new stablecoins are introduced, more CELO needs to be mortgaged, and the demand for CELO will increase.
In order to maintain the BFT consensus of the Celo network, Celo needs to elect validator nodes, and the validators need to mortgage a certain amount of CELO tokens.
Celo’s block rewards will be distributed to those who contribute to the system, including those who maintain the stability of the system by selecting validators, verifying transactions, verifying users, and participating in the Schelling Point price discovery mechanism, as well as those who bear the risk of contraction, and use Those who use the agreement as a payment method, those who invite others to use the agreement, and those who improve the agreement.
CELO holders can govern the agreement by voting, such as proposing a proposal to introduce a new stablecoin, and if the vote reaches a certain threshold, the new stablecoin will be introduced into the shared reserve.
Similarly, holding CELO is also at risk. When the supply is tight, if the demand for Celo stablecoin shrinks for a long time, the value of CELO may decline.
Celo usage
The current market value of CELO has reached 423 million U.S. dollars, and it is listed on Coinbase, the largest exchange in the United States. Celo has formed alliances with payment institutions, digital wallets, payment solution companies, digital asset lending companies, educational institutions, investment institutions, etc. to promote the use of the Celo protocol.
But there are still few stablecoins in the Celo protocol. According to the latest data on the official website, the stable currency in Celo is now only cUSD, and the circulation of cUSD is only 7.33 million. Reserve funds include CELO, BTC, ETH, DAI, and each asset is stored in a specific blockchain address.
to sum up
Celo has special features in address-based encryption schemes, reserve assets, and shared reserves. It increases the ease of use of stable coins, the diversity of reserve assets, and improves process efficiency. The market value of CELO is high enough, but the current circulation of stablecoins in Celo is not high, and the types of stablecoins need to be increased.
Reader questions
Is DeFi disrupting the entire blockchain ecosystem?
Answer: DeFi is indeed changing the entire blockchain ecology on a large scale. For example, due to the demand of DeFi, the oracle Chainlink is used more. Because liquidity mining requires LP tokens, Uniswap’s liquidity and transaction volume have doubled. Because of the popularity of DeFi, the Ethereum network has become very congested, and miners’ fees have increased, which may make it impossible for some other types of DApps to develop. In addition, DeFi is also changing the pattern between public chains. EOS, which has insufficient stablecoin USDT, lags behind TRON in this wave of DeFi boom.
Why does SUSHI launch three major institutes in one day? Is it just because of the money-making effect?
Answer: It’s not just for making money. It is certain that the currency listing strategy of centralized exchanges is now different from before, and even the largest exchanges have generated the FOMO sentiment of currency listing. At the end of August, Uniswap’s daily trading volume surpassed Coinbase, the largest exchange in the United States, and centralized exchanges could no longer ignore decentralized exchanges.
In addition, there are also reasons for the SushiSwap project itself. Now Uniswap is the largest decentralized exchange, and the LP tokens obtained after depositing in Uniswap can be transferred, which gives SushiSwap an opportunity. SushiSwap wants to allow users to provide liquidity on Uniswap by giving users SUSHI token incentives, and pledge LP tokens to SushiSwap, and finally convert it into its own liquidity. It now appears that this approach is effective. In the past week, the liquidity on Uniswap increased from 308 million US dollars to 1.9 billion US dollars, most of which were to pledge Uniswap LP tokens to SushiSwap for liquidity mining. If there is indeed a lot of liquidity left at SushiSwap in the end, then Uniswap’s position will face serious challenges.
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