A survey by Block Research shows that the supply of stablecoins increased 388% in 2021, driven by increasing uses of the dollar-pegged currencies.
The total supply surged from $29 billion at the beginning of the year to over $140 billion.
The demand for stablecoins has been triggered by the development of the Decentralized Finance ecosystem. Investors are now using stablecoins in liquidity mining.
The Chief Technical Officer at Tether, Paolo Ardoino, notes that the expansion in the derivative markets is another growth factor in stablecoins demand.
Circle’s CEO, Jeremy Allaire, forecasts larger growth next year, underpinned by the institutional investors. He adds that DeFi, CeFi, and the overall payment have the most use cases.
The growth comes despite regulatory challenges that have rocked the sector. President Biden’s Working Group on Financial Markets proposed new policies on stablecoins, same as that of banks.
Source: The Block Research