Q2'20 Review: Stablecoins at the heart of DeFi boom

In my Q1 2020 stablecoins review I suggested that 2020 could very well give 2019 a run for its money as the year of stablecoins. Three months later that hypothesis is shaping up to be more likely as stablecoins continue their impressive growth and make their impact felt across the crypto industry. By many measures Q2 topped the historic quarter stablecoins had to start the year.

While inter-exchange settlement remains the most dominantuse case for stablecoins by far, more generally, stablecoins are simply a better means of storing and moving dollars around the world. After all, 24/7 uptime and relatively quick settlement allows users to react to market conditions much faster than when dealing with traditional payment rails. In this respect stablecoins have also seen increased usage in DeFi and in various online payments use cases this quarter. The three use cases led stablecoins and many blockchains to their best quarter ever on many fundamental metrics.

But first a bird’s eye view of the stablecoin market.

Zooming out on Stablecoins

Monetary Base Growth

In Q1 2020 the stablecoin monetary base grew $2.4 billion to just over $8 billion. In Q2 2020 another $3.8 billion was added onto the base, bringing it to over $12 billion.