Top Stablecoins Shed $7B In May As Traders Redeem Tokens En Masse

The top four stablecoins by market capitalization have shrunk around 4% in May, with Tether losing 11% of its supply to redemptions

article-image

Blockworks Exclusive Art by Axel Rangel

share

key takeaways

  • Stablecoin holders are exchanging their tokens for cash, in some cases reducing the coins’ overall supply
  • Tether and DAI have shrunk the most throughout May so far

The top four stablecoins by market capitalization have lost nearly $7 billion from their collective supplies this month, as big money traders seek to redeem their tokens for cash.

Stablecoins Tether (USDT), Circle’s USD Coin (USDC), Binance USD (BUSD), and DAI together boasted nearly $159 billion supply at the start of May.

Intense market volatility and reduced risk tolerance in light of Terra’s collapse has sent that figure below $152 billion — a drop of more than 4%.

MakerDAO’s overcollateralized stablecoin DAI has lost the most supply this month on a percentage basis. Its market value on May 1 was $8.5 billion, according to CoinGecko data. Now, it’s a little over $6.2 billion — representing a 26% fall.

USDT was the second-hardest-hit. The largest stablecoin has shrunk by $9 billion in the month-to-date, an 11% drop. Bitcoin’s price fell around 25% in that time while ether crumbled by 30%.

USDT and USDC holders can exchange their tokens for US dollars from Tether and Circle respectively at a 1:1 ratio. Low demand leads to those redeemed tokens being burned.

BUSD users, however, can’t redeem their tokens via Binance directly. White-label stablecoin issuer Paxos handles BUSD redemptions instead. DAI is more decentralized — users can only redeem tokens for collateral under certain emergency conditions.

USDC and BUSD have actually grown throughout May’s market turmoil. USDC’s market value has jumped almost 7.5% — from more than $49 billion to a tad less than $53 billion. This is despite losing more than $3 billion from its market value throughout March and April.

Crypto exchange Binance’s stablecoin offering has added 5.5% so far this month; its market value rising from around $17.7 billion to $18.6 billion at press time.

At Blockworks’ Permissionless conference in Palm Beach on Wednesday, Circle’s Joao Reginatto told the crowd the stablecoin issuer had redeemed $7 billion USDC last week, equal to 11% of Circle’s total redemptions from 2021. 

But while May has seen the top stablecoins shrink, their total market value is still up 5.5% in the year-to-date, having added almost $8 billion.

USDC has grown 20% with $10.6 billion more tokens in circulation. BUSD boosted up 22% — representing growth of $4.2 billion. USDT has shed about $4.1 billion, a 5% reduction, while DAI dwindled by 30% — from $8.9 billion to $6.2 billion.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Templates.png

Research

ZKPs enable efficient offchain transaction processing and validation, resulting in increased throughput and reduced fees. Solana's ZK Compression leverages ZKPs to minimize onchain storage costs, while Sui's zkLogin streamlines user onboarding by replacing complex key management with familiar OAuth credentials.

article-image

Mt. Gox creditors are finally getting their bitcoin back — even if it’s only one click away from being sold

article-image

Plus, is Polymarket this cycle’s breakthrough mainstream app?

article-image

The crypto asset manager lowered its planned fee from 0.25% to 0.15%, undercutting its competitors

article-image

Plus, a look at planned ETH ETF fees and how they differ from their BTC counterparts

article-image

North Korea suspected in breach of Indian exchange’s multisig wallet

article-image

Plus, Sanctum’s CLOUD token has officially launched — but not without problems