Thread by @GarrickHileman

1/ We just published our massive 140-page 2019 stablecoins report. Here are some tl;dr highlights
blog.blockchain.com/2019/02/20/int… @blockchain

2/ Let’s kick things off with two correct calls we made in the 2018 report, starting with our forecast that there would be a “dampening of some of the enthusiasm for algorithmic stablecoins”. See for example @basisprotocol demise in late-Q4.

3/ In the 2018 report we also stated “space may exist for approximately 5-8 significant stablecoins in the short to medium-term”, correctly anticipating the weakening of @Tether_to ($USDT) in Q4 2018. See rise of @PaxosStandard ($PAX) @circlepay ($USDC) and @Gemini Dollar ($GUSD)

4/ However, @Tether_to ($USDT) is still the second most actively traded cryptocurrency at ~75% of BTC daily trading volume in 2019 (up from 57% in 2018), and in 2019 for the first time Tether entered the top-5 cryptoasset rankings by market value.

5/ What else is new in 2019 with stablecoins? In a word, growth: the total stablecoin market value share has grown to 2.7% of all cryptoassets, up from 1.5% in Sept. 2018.

6/ Total market value of all stablecoins has also more than doubled in the last 12 months, up from $1.4b at the start of 2018 to $3b today.

7/ Maturity: while a number of major fiat-backed stablecoins went live in 2018 (see above), @basisprotocol was not the only high-profile planned 2018 launch that failed to materialize (see also @sagafoundation, @terra_money, @sweetbridgeinc, etc.)

8/ Over half of all stablecoins offer some type of ‘upside participation’ (60%, up from 51% in 2018) in the form of holding another token with some rights over the stablecoin system (e.g., governance token @MakerDAO ($MKR)), or a ‘dividend’ mechanism e.g., ‘seigniorage shares'

9/ Format: 81% of all stablecoin projects are asset-backed (up slightly from 77% in 2018), and a higher percentage of these (62%, up from 54% in 2018) utilize on-chain collateral (i.e., cryptoassets like ether (ETH)) versus off-chain collateral (38%) (i.e., US dollars in escrow)

10/ Acceptance: stablecoins have continued gaining listings on major exchanges, with 15 stablecoins featuring on one or more Tier-1 exchanges (almost double from eight in Sept. 2018); 58% of live coins now have at least one Tier-1 exchange listing (up from 42% in 2018)…

11/…but uses for stabelcoins outside of exchange trading/storing value have failed to materialize in any material fashion to date. Emerging markets are being targeted by many stablecoin projects for additional use cases, such as remittances and merchant payments

12/ Competition: while market value share for @Tether_to dropped from 93% in Sept. 2018 to 69% today, Tether has recovered some from its rocky Q4 with its market value today up 23% from its early Nov. 2018 low of $1.7b

13/ Since Sept. 2018, both $USDC and @PaxosStandard have enjoyed outsized success, with the former knocking @TrustToken TrueUSD ($TUSD) from the #2 position in terms of market value, and @PaxosStandard leaping to #2 in daily trading volume

14/ Technology: @Ethereum is by far the most widely used technology platform for stablecoins, but now only 50% of all stablecoins are building exclusively on top of Ethereum (down from 60% in 2018)

15/ Technology: a growing number of fiat-backed stablecoins feature a centralized ‘freeze function’ in their smart contracts that enable the issuer or law enforcement to freeze or zero out individual stablecoin balances

16/ Legal: while the vast majority of stablecoins (73%) are structured as for-profit, the number of not-for-profit stablecoins has increased significantly from 15% in 2018 to 27% today

17/ Funding: with the demise @basisprotocol algorithmic stablecoins have now raised substantially less funding at $41m or 16% of the total for all stablecoins (down from $174m, or 50% of all stablecoin funding in 2018)

18/ Traditional asset-backed stablecoins lead funding and have raised $177m, or 71% of total stablecoin funding; crypto-collateralized stablecoins continue to bring up the rear with $32m or 13% of total funding raised, up from 9% in 2018

19/ Looking ahead: in 2019 expect further pressure on stablecoin business models as competition increases. For example, @TrustToken TrueUSD ($TUSD) has already cut fees to zero.

20/ We also expect to see stablecoin issuers that are seeking to retain operating profits for themselves (e.g., fiat-backed stablecoins) increasingly under pressure to extend upside participation to users.

21/ Finding a way to pass issuer earned interest revenue on to stablecoin holders may help counterbalance the network effect advantage algorithmic and cryptoasset-backed stablecoins (e.g., $MKR) have over fiat-backed stablecoins, which today do not offer upside participation

22/ That’s a sample of what can be found in the full 2019 State of Stablecoins report, which can be downloaded for free here: blockchain.com/research. A big thanks to all stablecoin projects and my colleagues @Blockchain and others that helped support this research.