Stablecoin Demand Surges On Ethereum Layer-2 Networks
According to Cointelegraph, stablecoins locked onto Ethereum layer-2 networks have reached unprecedented levels, reflecting a growing interest in cryptocurrencies. The stablecoin supply across all blockchains is primarily led by Tether (USDT), USD Coin (USDC), and Ethena’s USDe. As of December 20, the Ethereum blockchain held $13.5 billion worth of stablecoins, as reported by Tie Terminal, a crypto data platform for institutions and Cointelegraph Markets Pro. The overall stablecoin circulation has surpassed $205 billion, underscoring the increasing significance of stablecoins in practical applications.
In a December 15 post, Matthias Seidl, co-founder of block space analytics firm growthepie.xyz, emphasized the expanding stablecoin supply on Ethereum layer-2 networks, with the total value nearing $12 billion. Seidl noted the critical role stablecoins play in the current crypto cycle, particularly on layer-2 networks. According to DefiLlama, Arbitrum One leads with $6.75 billion, followed by Base with $3.56 billion. The total stablecoin market capitalization exceeded $200 billion on December 11, continuing to reach new heights after more than a year of growth. DefiLlama data indicates that the market cap has peaked at $202 billion, excluding algorithmic stablecoins, which are maintained through algorithms rather than pegged to external assets like fiat or gold.
The stablecoin market has shown a consistent upward trajectory, with the previous all-time high of $167 billion in March 2022, which later fell to $135 billion by the end of that year. Since November 7, 2023, when the market cap was $123 billion, stablecoins have experienced steady gains. Tether (USDT) has been at the forefront, with a market cap of $91.7 billion at the start of the year, growing to over $140 billion by December 19, according to DefiLlama. Circle’s USD Coin (USDC) also performed well, reaching $42 billion, although it remains below its peak of $55.8 billion in June 2022.
Looking ahead to 2025, stablecoins are expected to continue their growth. Arthur Azizov, CEO of B2BINPAY, suggested in a December 17 report that stablecoins could experience significant growth due to the European Union’s Markets in Crypto-Assets (MiCA) regulation. Additionally, Bitwise’s investment chief Matt Hougan and research head Ryan Rasmussen speculated in a December 11 report that stablecoin assets might double to $400 billion next year following the passage of stablecoin legislation in the US. They noted that stablecoins are increasingly penetrating the global payments and remittances market, with assets under management expanding alongside the broader crypto economy.