New stablecoin AUSD by Agora enters growth spiral

Stablecoins are once again reshuffling in July, reflecting shifting usage and demands for liquidity. Agora’s AUSD was among the assets with the fastest-growing supply. 

Agora’s AUSD expanded its supply by more than 7% in a month, becoming one of the fastest-growing niche stablecoins. AUSD is starting from a low initial base, explaining part of the growth. 

The AUSD asset aims to build up the liquidity of the Agora money market, a lending protocol built on Metis. The current growth of AUSD arrives as Agora aims to reinvent its protocol after a liquidity run during the 2022 bear market. 

Currently, AUSD has a market cap of $39.64M with still very limited activity and only four reported holders. The growth of AUSD suggests the Agora project may be revived. The defunct DeFi hub has just renewed its social media. The growth of AUSD also replaces the recent expansion of USDe by Ethena. 

Agora's AUSD stablecoin is currently the fastest growing stablecoin in the market, based on 7d supply growth. pic.twitter.com/Q2o7Uixfxw

— Token Terminal (@tokenterminal) July 25, 2024

The AUSD asset is still in its limited availability period. The Agora project is now aiming to relaunch, while turning AUSD into the cheapest stablecoin in terms of gas fees. In the near future, AUSD may also start minting tokens on Avalanche. AUSD and its gas optimization was created by CTO Drake Evans, who formerly worked on the Frax protocol. He has optimized gas fees for Fraxlend protocol, aiming to turn optimization into a native feature for AUSD. Additionally, AUSD is expected to become the main asset for a yield-bearing ecosystem. 

Most niche stablecoins had a growth trend in the past 30 days. Fei Protocol expanded its supply by 114% in the past month, and Aave’s GHO stablecoin grew by more than 87% during that period. Synthetix also grew the supply of sUSD, up more than 73% in July.

The list of niche stablecoins is growing longer, due to demand for passive income. Yet those yield or lending protocols remain much riskier. 

In the past month, the Lybralabs.ETH handle also issued a new niche stablecoin, eUSD. The asset’s supply is still held by around 600 wallets. In the past month, eUSD expanded by more than 170%, adding another 23% to its supply just in the past day. The backing of eUSD is based on other crypto assets and redundant collateral for additional security.

Leading stablecoins increase supply to new chains

The bigger story for crypto assets is the expansion of the two leading stablecoins, USDT and USDC. Tether’s USDT is now predominantly represented on TRON, where it offers cheaper transactions. 

TRON-based USDT is also more widely used for trading on top Chinese exchanges. TRON-based USDT is now more than $61B, while Ethereum-based USDT is more than $88B tokens. The total supply of USDT on all chains is now above 113B, after adding about 1B tokens in the past 30 days.

TRON-based USDT is the second-biggest asset by total supply, but is the most active smart contract. The token is also used in e-commerce and peer-to-peer platforms, displacing Bitcoin (BTC) and Ethereum (ETH). 

Tether's USDT on @trondao is the (i) biggest stablecoin, and the (ii) most gas-consuming smart contract in the crypto market: pic.twitter.com/LBD2i1UOAt

— Token Terminal (@tokenterminal) July 26, 2024

Gradually, stablecoins are also expanding their supply on the leading L2 chains Arbitrum and Optimism. Circle’s USDC was among top growers, adding 33% to its Arbitrum version in a week. USDC expanded its supply to more than $32M, and is one of the key tokens bridged from Ethereum.

Blockchain representation is also shifting. Solana’s stablecoins are at $2.84B, while Base expanded its supply this summer to surpass Solana with $2.9B in stablecoins. Most of the assets on Base are paired with USDC, due to the token’s regulated status. 

The stablecoin supply is still close to the levels from 2022, and has not returned to the supply during the absolute market peak of late 2021. The biggest shift of usage is between fiat-collateral stablecoins and those based on crypto collaterals. In the past quarter, the on-chain usage of crypto-collateral stablecoins grew from a share of 25% to a share of 40%, based on the revival of DeFi. 

Those tokens were more widely circulated on their various blockchains, for trading, lending, yield farming, or for arbitrage. The usage was led by DAI, also sparking the wave of new, still-growing stablecoins. 

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Cryptopolitan reporting by Hristina Vasileva