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DeFi Market Health: A Stablecoin Perspective
Key Insights
- Global total value locked excluding Terra fell 37% in May which is in line with other major corrections.
- Overall stablecoin supply fell over May for the first time and is down 15% month over month.
- On-chain stablecoin decentralized exchange (DEX) liquidity is relatively healthy as much of the liquidity reduction was in unproductive protocols such as Curve.
- Stablecoin debt utilization hit all-time-lows (57%) in May and remains at reduced levels.
- Daily active addresses are down 7% on Ethereum while retail-heavy chains like Avalanche and Polygon have dropped by 25–50%.
Stablecoins (“stables”) are the one asset essential to the health of the DeFi ecosystem at both market tops and bottoms. Stables operate as the user's safety asset (bottoms) as well as their leverage asset (tops). They thus have unique importance as they relate to the broader DeFi ecosystem and its health.
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Dustin was previously the Enterprise research director at Messari. He has a broad focus across crypto with a particular interest in AI x Crypto, Consumer financialization, DeFi, and general infrastructure.
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