Tether is the dominant stablecoin with an 87% share of total stablecoin market capitalization

Authors: Marcel Kaiser, Philipp Sandner

Many cryptocurrencies are exposed to high volatility, whereby stability is what token holders would wish for. The logical consequence: payment tokens that promise value stability, so-called stablecoins. With the announcement of Libra, more attention is once again being paid to this issue, and we have therefore used our data to perform a quick analysis of the stable coin market by market capitalization.

Figure 1: The market capitalization of the six largest stablecoins. Figure and data provided by the International Token Standardization Association (ITSA) e.V.

This diagram is an overview of the market capitalization of the six largest Pegged Payment Tokens (stablecoins) as of 13th April 2019. The by far largest stablecoin is Tether which is pegged to the US-Dollar and has a total market capitalization of over $2.1bn. It was created to avoid high transaction costs and high volatility with less stable payment coins. The second largest stablecoin True USD is pegged to the US-Dollar as well but is just short of a market capitalization of $200m. Dai is also worth mentioning despite its rather small market capitalization of $91m, because it steps out of line here: One Dai represents one US-Dollar, but it is backed by Ethereum instead of real US-Dollars. This allows Dai holders to conduct transactions based on US-Dollar values while not having any fiat currency to cover the stablecoin.

A Pegged Payment Token (EEP21P) is a token whose value is intended to be kept stable over time in order to better fulfill the classic functions of money compared to Unpegged Payment Tokens — therefore they are also called stablecoins. Pegged Payment Tokens exist in various forms: there are fiat-, commodity- or crypto-backed stablecoins but also algorithm-based stablecoin models.

The market capitalization represents the product of the current market value of the respective asset and the supply of units in circulation. Market capitalization can be used to assess the relevance of a token and the value that investors see in that token.

The recent announcement of Facebook’s cryptocurrency “Libra” exemplifies that also bonds can be used to back a stablecoin. Any other asset can be used to stabilize the value of a stablecoin, such as precious metals, industrial commodities, regular stocks or other crypto currencies (e.g., Dai).

Remarks

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You are invited to download this figure and distribute it or use it for your own purposes. This figure is free for use. For reference, please use “(TOKENBASE, 2019)” and “TOKENBASE, version of April 2019, International Token Standardization Association (ITSA), see www.itsa.global" in the footnote.

Prof. Dr. Philipp Sandner is head of the Frankfurt School Blockchain Center (FSBC) at the Frankfurt School of Finance & Management. In 2018, he was ranked as one of the “Top 30” economists by the Frankfurter Allgemeine Zeitung (FAZ), a major newspaper in Germany. Further, he belongs to the “Top 40 under 40” — a ranking by the German business magazine Capital. The expertise of Prof. Sandner in particular includes blockchain technology, crypto assets, distributed ledger technology (DLT), Euro-on-Ledger, initial coin offerings (ICOs), security tokens (STOs), digital transformation and entrepreneurship. You can contact him via mail (email@philipp-sandner.de), via LinkedIn (https://www.linkedin.com/in/philippsandner/) or follow him on Twitter (@philippsandner).

Marcel Kaiser is part of the token analytics team of the International Token Standardization Association (ITSA) e.V. Next to working as a project manager at the Frankfurt School Blockchain Center (FSBC), he is graduating in Economics, writing his master’s thesis about Central Bank Digital Currencies (CBDCs). Besides, he is an active member of the bdvb Bayreuth Crypto and Blockchain Meet-Ups and furthermore holds a B.Sc. in Nanoscience. You can contact him via email (marcel.kaiser@itsa.global) or via LinkedIn.