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The explosion of decentralized finance (DeFi) in the third quarter brought significant growth to stablecoins compatible with Ethereum (ETH).
According to data from the crypto market data aggregator Messari, MakerDAO’s DAI supply increased by 623% in the third quarter in 2020, making the value of the stablecoin more than $1 for four consecutive months.
Since the beginning of July, the market value of DAI has approached 130 million U.S. dollars, and its supply has now grown to more than 940 million U.S. dollars.
DAI was created when Ethereum holders deposit their ETH into the MakerDAO protocol, which allows them to use Ethereum as collateral to create the stablecoin. DAI is an ERC-20 token that can use the DeFi protocol to generate interest or “income” on the Ethereum network.
Messari attributed the recent growth of DAI to four important liquidity mining plans launched in the DeFi field, including the change in the income distribution of Compound (COMP) on June 30, the increase of DAI rewards, and the launch of Yearn Finance on July 18 (YFI) Mining, Curve (CRV) was launched on August 13, and liquidity mining of Uniswap token UNI was launched on September 16.
Messari estimates that 65% of the current total supply of DAI has been provided to the DeFi protocol for liquidity mining.
The demand for USD Coin (USDC) launched by Circle also experienced explosive growth in the third quarter. The market value of USDC has tripled from USD 928 million on July 1 to USD 2.79 billion today. USDC has grown by more than 1 billion U.S. dollars in a single quarter and is the second largest stablecoin after Tether (USDT).
Data released by Flipside Crypto shows that after the launch of the Curve platform, DeFi users’ demand for USDC has surged. Since the launch of the Curve platform, the market value of USDC has increased by 150%.
Messari estimates that the capital of the entire stablecoin industry increased by $8.2 billion in the third quarter, more than the sum of the previous four quarters. Of the $20 billion in stablecoin capital in the industry, Messari estimates that 75% of it is issued on Ethereum.
USDC has also cooperated with blockchain networks Solana (SOL), Stellar (XLM), Algorand (ALGO) and Flow (FLOW).