Victor Ugochukwu · Dec 14, 2020 . 5min read
DAI stablecoin supply grew by over 600% in Q3 of DeFi summer
Maker Dao's stablecoin DAI surpassed its previous heights by crossing over 600% growth due to the yield farming mania.
By Victor Ugochukwu · Oct 24, 2020 . 5min read
Dai stablecoin supply had a wild run in the third quarter – Q3 of 2020 as it grew by more than 600% primarily fuelled by the yield farming mania at the height of the DeFi bull run which lasted till late September.
Dai is a multiasset stablecoin that seeks to maintain a soft peg with the U.S. dollar. DeFi pioneer MakerDAO created Dai as a collateralised debt position whenever a user aims to borrow loan from Maker. Being an ERC-20 token, it is usually integrated into various DeFi protocols that offer multiple functions, from lending to liquidity mining to even the fast pace yield farming. In a nutshell, Dai is an integral part of major DeFi protocols.
While most of them arguably count June as the month when the DeFi boom started with the distribution of COMP (this sparked off what people have come to know today as yield farming) token by the lending protocol Compound, Dai’s supply was merely $130 million by July. By October, Dai’s supply had exceeded $940 million, nearing the billion-dollar supply.
According to Messari, a cryptocurrency and blockchain analytics platform, four epoch events contributed to Dai stablecoin over 600% growth in supply in Q3. COMP yield distribution is the first. This had a significant effect in Dai supply by June 30 when the distribution commenced. The next would be Yearn’s YFI yield farming by July 18. Curve was launched by August contributing to Dai stablecoin pump. And finally the UNI launch by Uniswap in September all within Q3.
More than half of Dai’s entire supply goes into yield farming.
In the report, Messari shows that more than 65% of Dai’s entire supply arises due to DeFi protocol users yield farming activities. Meanwhile, there are other stablecoins within the DeFi ecosystem which are ERC-20 tokens also. USDC which recently added Solana as part of its chain also had an impressive turnout in 2020, Q3 especially. For instance, USDC market cap climbed from $517 million in January to about $2.8 billion today. Tether still controls the largest market share among stablecoins almost $16 billion in a $21.5 billion industry.
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