Ethereum has never primarily been about the price of its native ETH, the goal of the blockchain was to pioneer the path for smart contracts and programmable blockchains which allow for the creation of stablecoins for example, which are currently transferring more value than Ethereum (ETH) itself.
This is because many stablecoin projects have started using the ETH blockchain as their platform.
Growing stablecoin projects include Tether USDT, USDC, PAX, and DAI, which have found their home on the Ethereum blockchain. Their growth is so impressive that a remarkable thing has happened, and is continuing to happen.
The transfer value of stablecoins on Ethereum has flipped the volume of ETH on the Ethereum chain. In fact, this flippening actually happened in the middle of last year, and the continued divergence of these two cumulative transfer values paints an interesting picture on the direction of the mass adoption of cryptocurrencies.
The fact that Ethereum’s economy is now dominated by stable value is indicative of an industry moving away from volatility and into the realm of stablecoins, as well as DeFi. Demand for such projects has driven this remarkable change on the Ethereum blockchain, and its continued growth looks like it could lead to the next wave of mass adoption.
The importance of stablecoins
The cryptocurrency space is still primarily preoccupied with Bitcoin and what the major cryptocurrency by market cap is doing, both technologically, and in the market. Ethereum has always been a worthy competitor for the spotlight due to its pioneering programmable blockchain structure, but in actuality, stablecoins and their recent surge in growth is the major underlying theme.
It is easy to forget that the trading volume of USDT often outperforms that of Bitcoin on a daily basis. The controversial stablecoin from Tether is an important facet of the cryptocurrency space and without it, there would be a lot less use cases in the entire industry.
Tether is also one of the main factors for the Ethereum flip, although the rise of Decentralized Finance is also significant as it is finding home on the Ethereum chain. DeFi, which is the use of traditional financial services on a decentralized blockchain, operates far better with a stable value and also attracts newcomers to cryptocurrency who want what is familiar.
Within the growing DeFi market, there is a competition between the various stablecoins, aiming to be the stable currency of reference. USDT and DAI look to be the primary candidates to top this area. Moreover, as stablecoins grow, so does DeFi, which in turn boosts the need for these coins even further.
Looking for familiarity
The greater implications of the transfer value flip between Ethereum and stablecoins concern the adoption of the cryptocurrency space. Traditional Bitcoiners and early adopters are not the biggest fans of stablecoins due to their links to traditional finance and fiat, but for newcomers, there is a familiarity that makes the transition easier.
For many, the biggest barrier to entry into cryptocurrencies is the ever swinging volatility. This is easily addressed by stablecoins, and instantly alleviates a large portion of the fear of getting involved. Thus, when there is a clear indication of increased trading with stablecoins, as seen on Ethereum, it shows a greater level of adoption.
If stable value is taken seriously, and DeFi continues to grow at the current rate, the notion of cryptocurrencies being more normalized does not seem so foreign. Bitcoiners must dislike that stablecoins are the pathway to cryptocurrency adoption, but it is not something to the detriment of Bitcoin, on the contrary.
The major cryptocurrency by market cap has long since left its currency roots behind it, preferring to be used as a store of value where volatility and price fluctuations are key. For the move towards digital currencies, there needs to be working and stable currencies, which are easier for crypto newcomers to wrap their heads around.