Terra ecosystem collapsed earlier this month
The Terra ecosystem collapsed earlier this month, with the LUNA token plunging to zero after the UST stablecoin lost its peg. The risk of contagion then spread to the stablecoin landscape.
Also, Tether (USDT) came under an intense spotlight over the last week as it briefly lost its peg with the dollar. Following this, there was a huge redemption of USDT. On May 17, Paolo Ardoino, chief technology officer at Tether, said the firm had around $7 billion USDT redeemed for USD within 48 hours.
Tether recently announced that it has reduced the amount of commercial paper in the reserve backing its stablecoin by $74 billion. Tether Holdings Ltd. had assets of at least $82.4 billion as of March 31, with $82.2 billion in debt tied to digital tokens it creates, according to insurance from MHA Cayman in the Cayman Islands.
On-chain analytics firm Santiment delivers three metrics that provide an overview of the stablecoin topography during and after the Terra UST crash.
Transactions
According to Santiment, a flight to safety from USDT to USDC was seen in Tether’s decline in USDT market capitalization and subsequent increase in USDC market value. According to data from CoinMarketCap, Tether remains the largest stablecoin by market value at $74.14 billion, followed by USDC at $52.80.
Network growth
At the first indication of UST de-pegging, retail folks started to convert whatever UST was possible to either USDT or USDC, the industry’s two biggest stablecoins.
Supply distribution
While network growth for USDT increased rapidly during the UST collapse, Santiment notes that the distribution of supply by number of addresses suggests that many wallets may have stopped holding USDT altogether. . The reverse happened on the USDC side.
