Osmosis: Stablecoin Dominance
Q20. Compare the transaction volume for USDC, USDT, and DAI on Osmosis. Is there a stable coin that Osmosis users prefer?
Stablecoins plays a key role in cryproverse, the main functionality of stablecoin is to maintain an 1:1 peg between a fiat currency mostly USD. There are certain types of stablecoins, for an example USDC, USDT etc are fully backed by USD, which are centralized while stablecoins like "late" UST are called algorithmic stablecoins where it maintains the peg algorithmically thus it's decentralized. However we saw last month that UST fail to keep up to its promises and failed miserably. In this analysis we're going to look at what stablecoins were/are more dominant on Osmosis.
Approach
- There are multiple ways people can use stablecoins on Osmosis.
- Transfers are one, A user can transfer stables between each other on Osmosis
- Also do interchain IBC transfers
- Apart from transfers people can swap their stables to other coins as well as other coins to stables.
- So in this analysis we're going to look at both transfers and swaps.
- We'll also look at UST for as a comparison.
- Since UST depeg heavily since May we will convert its value to dollar value with the price from coingecko api (Since the price data on Osmosis table and Terra table were not complete for USTC)
- Finally we're going to look at swaps on Suhsiswap and Thorchain to see whether there are any distinct patterns across these 3 major DEXs.
- For this analysis we'll consider, USDC, USDT, DAI, FRAX and UST additionally BUSD on Sushi and Thorchain. We can see there are two variations USDC abd DAI, Axelar bridge with axl prefix and Gravity bridge with .grv postfix to the currency name.
I've built a simple dashboard as a supplementary to this analysis using flipside crypto data, please use that tool with its interactive features. (and I am willing to receive any feedbacks :) ). You can access that tool here
- Now what that shows is before the May Mayhem (prior to Terra collapse), Osmosis users had predominately used UST as the go to stablecoin, but with the dramatic fail of UST,
- The transfers of stables as a whole has reduced significantly
- New leader has emerged but it has yet to achieve the level of dominance that UST had during its great days.
Let's look at the same picture without UST to get the idea.
- It's really interesting that apart from 23rd of April, that too a tiny spike, there were no major activities on Osmosis with other stablecoins.
- However there are some interest started towards axlUSDC and axlDAI after Terra collapse, specially in the mid May we can see some high peaks.
What really interests is that although the amounts are pretty low for other stable coins relative to UST on Osmosis, when we compare the UST volumes prior to Terra collapse and other stable coin volumes after the terra collapse, in terms of number of users who are transferring there's no huge difference. What this means is when UST at its peak the people who transferred them were doing that in huge quantities but when it comes to other stables even after Terra's collapse the average quantities are low. specially during the collapse we don't see a huge spike in the number of UST transferring users but above we saw a huge spike in volume which also confirms that the users have transferred UST in high quantities as opposed to other stable users.
- axlUSDC user base seems to have picked up their activities since Terra collapse.
Unsurprisingly, the IBC transfer outs has a similar tendency.
- There's a huge outflow of USTC during the May Mayhem, and the activities on other stables specially axlUSDC has picked up although the volumes are smaller compared to that of UST, the number of users that are using have almost matching that of UST on average.
- The activities peaked from 8th May to 13th May specially with UST
- In terms of the number of users there's no drastic difference to the "UST era" but the volumes have significantly reduced.
- axlUSDC is again the front runner.
Now the trends are pretty different here.
- USDC is the dominant stablecoin on Sushiswap
- There is some activity on UST during the May Mayhem, however that's not as significant as on Osmosis.
- Although the UST had some activity in Thorchain during April, the Terra collapse hasn't seem to hurt Thor as much as that did to Osmosis.
- Thor has BUSD as the most dominant stablecoin.
Conclusion
Since UST was a huge part of Osmosis, as the main stablecoin on IBC network, the collpase of that coin had made a huge impact in activities which is not the case on Thorchain or Sushiswap. However, even on Osmosis we can see that number of users who use stablecoins hasn't decreased drastically but the volumes have decreased significantly, which means the users who either transfer or swap with stables on Osmosis now do that with smaller quantities where UST users used to do that in larger quantities(if we compare). USDC bridged from Axelar seems to have front running the stable scene on Osmosis now while USDC and BUSD are the most popular on Sushiswap and Thorswap respectively.