The market for stablecoins experienced breakneck growth in 2021, with the supply for dollar-backed cryptocurrencies surging by 388%, according to data compiled by The Block Research. From a report: As indicated by The Block Research’s 2022 Digital Asset Outlook report, the aggregate supply of stablecoins has increased from $29 billion at the start of 2021 to more than $140 billion. That growth benefited a swathe of stablecoins, including tether (USDT) and USD coin (USDC), which is managed by a consortium that includes Circle and Coinbase.
Several factors contributed to the surge in the outstanding supply of stablecoins, which historically have been used by high-speed crypto trading firms as a way to dampen volatility when trading between different cryptocurrencies. Over the course of 2021, retail traders parked stablecoins on decentralized finance protocols as a way to tap into juicy yields. The growth of the derivatives market was another tailwind. Most derivatives venues settle futures contracts in stablecoins, noted Tether’s Paolo Ardoino.
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