2022 was the first year after 2018 in which the Stablecoins economy declined significantly instead of going up.
Literally, $28 Billion was ripped off from the economy in 12 months’ time. While over 23% decline which took away roughly $3 Billion was seen lately by the economy since November to date.
Massive Value Reduction in Stablecoin Economy
How could the stablecoin economy show resistance when the underlying assets, with which stablecoins are pegged with, were incurring rapid value declines.
The economy losing $28.08 Billion and reducing to $139.06 Billion from $167.08 Billion was inevitable and nothing could be done.
When the year 2022 began, the stablecoin economy was valued at $167.08 Billion as of 5th January 2022. As of now, the value of the economy is reduced to approximately 16.77% i.e. $139.06 since 5th January 2022 to date.
Between 2018 and 2022, there was one occasion when the economy did decline near that level which happened on 23rd October 2021. However, a quick recovery put the economy back on track.
Leading Stablecoins’ Economies In 2022
Tether (USDT) is so far the most popular and widely used stablecoin in the global stablecoin economy.
As of 5th January 2022, USDT’s economy was hovering above $77 Billion which, as of today, is reduced to $66 Billion only.
After USDT, the next most popular and widely used stablecoin is USDC. At the relevant time, USDC’s overall market cap was exceeding $42 Billion and now it has been increased to $44.28 Billion.
As compared to USDT, USDC was able to avoid declines and acquired value gains in the economy of approximately $2 Billion.
The third largest stablecoin, BUSD, which is sponsored by NASDAQ-registered exchange Binance, also fetched value gains. BUSD’s economy was $14.28 Billion in January 2022.
As a result of the gains, as of 5th December 2022, the BUSD economy was resting at $22.08 Billion.
However, as of 28th December 2022, the decline hit the economy and reduced it down to $17.16 Billion.
A year ago, DAI was moving ahead in the market with a boosted valuation of more than $9 Billion. Even DAI couldn’t resist bearish market conditions and resultantly saw its value decline to $5.12 Billion.
Terra Network’s Stablecoins Economy Fail
On the other hand, TerraUSD (UST) was valued at $10.19 Billion as of 5th January 2022. As of today, UST’s valuation is at the bottom and indicates a value of $215 Million.
UST’s decline is obvious because the stablecoin’s network namely Terra is no more. The network collapsed in May 2022 as a result of which its native stablecoins UST, as well as LUNA, were devalued.
It became one of the most controversial and highly concerning assets in the crypto industry in 2022. Even the co-founder of the company that was behind the creation of TerraUSD, is wanted by the South Korean authorities.
Do Kwon, the co-founder of Terraform Labs, the company that issues TerraUSD, is on the run from the South Korean authorities.
He is wanted for offering an asset with the intention of stealing funds from people. There are several allegations against him and the South Korean authorities have ceased millions of dollars belonging to Kwon.
Latest Reduction
Economies in the world of stablecoins were moving in that direction steadily until 5th December 2022. Thereafter, the economy started to shrink again and from 5th December till 28th December, it lost more than $3 Billion.
Hence, the global stablecoin economy has been further reduced from $142.07 Billion to $138.99 Billion within this month alone.
Stablecoins’ Future
Presently, it is unlikely that market conditions will get any better sooner or later in the near future. Even the macroeconomic events are such that they do not warrant any substantial change of events favoring the stablecoin economy.
Yet, high hopes with regard to 2023 are there but would they be coming true or not, only time will tell.