Stablecoins remain a cornerstone of the cryptocurrency ecosystem, serving as both a safe haven during market turbulence and a primary medium for trading and decentralized finance (DeFi) activities. In periods of high volatility, such as recent market swings, stablecoins like USDT have accounted for 60%–75% of Bitcoin trading volume, often trading at a premium on over-the-counter markets. This underscores their critical role in liquidity and risk management.
Since February, the stablecoin landscape has seen notable shifts in issuance patterns, chain distribution, and market concentration. Despite the dominance of USDT—holding over 80% of the market—emerging stablecoins like USDC, DAI, and newer entrants such as USDE and NUSD are gaining traction. At the same time, decentralization trends are reshaping how stablecoins are issued, used, and held.
This analysis, based on blockchain data from DAppTotal and PAData, explores key developments since February, including net issuance trends, transaction dynamics, holder concentration, and evolving use cases within DeFi.
USDT Dominance Rises to 83%
Tether (USDT) continues to lead the stablecoin market with an expanded share of 83.10%, equivalent to approximately $4.95 billion in total market capitalization across its major variants: OMNI-USDT, ERC20-USDT, TRC20-USDT, and EOS-USDT.
While USDT’s dominance briefly dipped to around 70% in early 2019 due to trust concerns surrounding Tether and Bitfinex, it has since rebounded and stabilized above 80%. The recovery was fueled by multi-chain expansion, particularly on Ethereum via ERC20-USDT.
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Currently, ERC20-USDT is the most dominant version, representing 61.35% of all USDT supply and 50.99% of the entire stablecoin market. Its market share saw significant jumps on February 20 (+5.27%) and March 5 (+3.94%), indicating strong demand on the Ethereum network.
In contrast, TRC20-USDT has seen a slight decline in both value and market share, down 5.25% in value and 0.11% in market share, suggesting reduced usage on the Tron blockchain during this period.
The remaining market is distributed among several competitors:
- USDC: $459 million (7.70%)
- PAX: $200 million (3.36%)
- TUSD: $129 million (2.17%)
- BUSD: $98 million (1.64%)
- DAI: $71 million (1.20%)
These figures highlight that while alternatives exist, none have come close to challenging USDT’s dominance.
$562 Million Net Issuance Since February
From February 1 to March 9, stablecoins experienced 268 issuance events and 220 redemption (burn) events, averaging about 7 issuances and 6 redemptions per day.
Total issuance reached $1.553 billion**, while redemptions totaled **$981 million, resulting in a net increase of $562 million in circulating supply—injecting fresh liquidity into the crypto economy.
The biggest contributor was ERC20-USDT, which added $740 million to circulation with no redemptions recorded—making it the single largest source of new capital.
Other net positive issuers include:
- BUSD: +$57 million
- USDC: +$18 million
- Several smaller stablecoins (EOSDT, USDS, USDx) each added over $10 million
However, not all stablecoins grew:
- TRC20-USDT shrank by $216 million
- PAX lost $26 million
- DAI, NUSD, GUSD, and USDE each declined by more than $10 million
This divergence suggests shifting preferences across chains and platforms, with Ethereum-based assets gaining favor over Tron or niche offerings.
Correlation Between Issuance and Market Sentiment
To assess whether issuance reflects investor sentiment, we analyzed the relationship between net issuance and the Alternative.me Fear & Greed Index, which measures market psychology using volatility, volume, social sentiment, and surveys.
Overall, there's no statistically significant correlation between total stablecoin net issuance and market sentiment.
However, some individual stablecoins show meaningful patterns:
USDx, a decentralized stablecoin from dForce, shows a strong negative correlation between its net issuance and fear/greed levels—especially when comparing issuance to average sentiment over the next seven days.
- Interpretation: More USDx is issued during fearful periods, likely because users deposit collateral to earn yield in lending protocols like Lendf.Me—effectively using it as a "safe savings" tool.
- TRC20-USDT also shows a high negative correlation with future market sentiment—suggesting that spikes in its issuance tend to precede bearish price action.
These insights hint at nuanced behavioral differences between centralized and decentralized stablecoins.
Over $46.6 Billion in On-Chain Transactions
Since February, stablecoins have recorded over 5.23 million on-chain transactions, totaling more than $46.6 billion in transferred value.
Breakdown by network:
- ERC20-USDT: 3.55M transactions ($30.5B) — 67.8% of volume
- TRC20-USDT: >300K transactions (> $30B)
- OMNI-USDT: >300K transactions (> $30B)
- USDC: >300K transactions (> $30B)
Clearly, USDT variants dominate transaction activity—especially on Ethereum—but other stablecoins lag significantly behind in both frequency and volume.
When analyzing transaction volume against market sentiment:
DAI shows a strong positive correlation with greed indicators—high DAI activity tends to occur during or just before bullish phases.
- Similar behavior is observed with sUSD.
- Conversely, GUSD activity correlates negatively with future sentiment—high GUSD transfers often precede market fear.
- Notably, ERC20-USDT transactions show no meaningful link to market mood, reinforcing its role as a neutral transactional layer rather than a speculative instrument.
⚠️ Note: These correlations are observational and should not be interpreted as causation or used for direct trading signals.
Holder Concentration: Still High but Declining
Despite increased adoption, stablecoin holdings remain highly concentrated.
As of March 9:
- Average share held by the top 100 addresses across all stablecoins: 70.19%
- Highest concentration: OMNI-USDT (87.62%)
- Lowest: DAI (52.57%)
Even more striking: the top 5 whale wallets collectively hold an average of 6.35% per address, meaning just 8 wallets could control half the supply of any given stablecoin.
Compared to PAData’s 2018 findings—where top 5 addresses held ~12.75% each—the current concentration has roughly halved. This reflects broader user adoption and improved distribution over time.
👉 See how wallet distribution impacts market stability and decentralization metrics.
That said, outliers exist:
- The largest OMNI-USDT holder is Tether Treasury itself.
- TUSD’s top holder controls ~18% of supply.
Excluding these cases, real-world whale concentration may be lower than averages suggest.
Exchange-Centric Liquidity Remains a Bottleneck
Beyond issuance and holdings, trading volume concentration reveals another layer of centralization.
Many non-USDT stablecoins rely heavily on single exchanges:
- USDE: 100% of volume comes from eToroX
- nUSD: 99.97% via KuCoin
- BUSD: 98.09% on Binance
- Several others (EOSDT, EURS, GUSD, TUSD, USDC) have over 50% of volume from one exchange
This dependency limits their utility outside specific ecosystems and raises concerns about resilience and true decentralization.
Emerging Trends: DeFi and "Meta-Stablecoins"
New developments are expanding the definition of what a stablecoin can be:
1. Exchange-Issued Stablecoins
Binance (BUSD), Huobi (HUSD), and others have launched branded stablecoins—often in partnership with regulated issuers like Paxos. While these benefit from built-in exchange liquidity, they struggle to gain traction beyond their native platforms.
2. Chain-Specific Variants
Tron’s TRC20-USDT and Ontology’s ONT-PAX aim to boost DeFi activity within their ecosystems. However, TRC20-USDT’s recent decline suggests limited spillover success compared to ERC20-USDT’s explosive growth.
3. Tokenized Assets as "Meta-Stablecoins"
With DeFi’s rise, assets like WETH, WBTC, HBTC, and imBTC are emerging as de facto stable units within protocols—despite being pegged to volatile assets like ETH or BTC.
- These tokens enable BTC/ETH to be used in lending, yield farming, and synthetic asset platforms.
- Functionally similar to stablecoins: they’re 1:1 backed and serve as collateral or mediums of exchange within closed systems.
FAQ
Q: Why does USDT still dominate despite trust issues?
A: Because of its deep integration across exchanges, high liquidity, multi-chain availability (especially ERC20), and established user trust—even amid controversy.
Q: What drives DAI’s correlation with market greed?
A: DAI is deeply embedded in DeFi protocols. During bullish periods, demand surges for leveraged positions and yield strategies—increasing DAI minting and usage.
Q: Are decentralized stablecoins safer than centralized ones?
A: They reduce counterparty risk but introduce smart contract and governance risks. Safety depends on protocol design, transparency, and collateral health—not just decentralization.
Q: Why do some stablecoins only trade on one exchange?
A: Many are co-branded or technically restricted to specific platforms. Without incentives or integrations elsewhere, liquidity remains siloed.
Q: Is high whale concentration risky for stablecoins?
A: Yes—it can lead to price manipulation or sudden sell-offs. However, most large holders are known entities (e.g., treasuries), reducing uncertainty.
Final Thoughts
Stablecoins are evolving beyond simple dollar proxies into core infrastructure for global digital finance. While USDT remains dominant—with rising issuance and Ethereum-centric growth—the rise of DeFi-native assets and exchange-backed alternatives signals a diversifying landscape.
Yet challenges remain: centralization in issuance, trading, and holdings persists. True decentralization will require broader adoption across chains, reduced reliance on single platforms, and greater transparency.
👉 Stay ahead with real-time insights into stablecoin flows and market-moving trends.