Tether over $100 billion, DeFi TVL just below that – BitcoinBlog.de – the blog for Bitcoin and other virtual currencies

It is well known that Bitcoin has reached a new all-time high in the euro. But there are several other thresholds that the market is currently breaking. At $100 billion, the stablecoin Tether (USDT) and the entire TVL in the DeFi space are a pretty symbolic mark.

In addition to the all-time high in euros, the market has broken a few other exciting marks in the past few days. First, there are more than 100 billion Tether dollars in circulation. Secondly, the “TVL”, the “Total Value Locked” in Decentralized Finance has reached almost $100 billion.

The Tether record is easy to understand: Tether issues tokens, the USDT. These represent one dollar each because, according to Tether, they are backed by bank deposits or comparable values. Over the course of this week, Tether has now broken through the 100 billion Tether threshold. There are currently 100.484 billion USDT in circulation.

This means that Tether has not only maintained its position as the leading stablecoin, but has also significantly expanded it. The circle dollar USDC threatened to attack Tether’s position a few years ago, but is now far behind, while the third major stablecoin, the decentralized, algorithmic DAI dollars, is largely stagnating at a good five billion dollars.

The Tether Dollar USDT became the stablecoin or dollar token par excellence. In comparison, all other currencies – euros, yen, francs, etc. – and all other issuers pale in comparison. USDC and DAI still have a few percent of market share, after that everything else fades into insignificance.

With now more than $100 billion, Tether has reached a money supply that approaches the M1 money supply of medium-sized countries such as Brazil or Great Britain. M1 includes cash in circulation and demand deposits, but not savings.

100 billion TVL mainly because of staking

The second threshold is more difficult to understand: the TVL. This means the values ​​locked in smart contracts, for example to stake Ether, lend dollar tokens or provide liquidity for decentralized exchanges. The “Total Value Locked” of the entire DeFi market refers to the amount of capital that is productive in decentralized finance.

This week the TVL is brushing against the magical $100 billion threshold. It hasn’t quite cracked it, but it’s close to it.

To be fair, one has to admit that this is not a record. At the peak of the “DeFi summer” of 2021/22, the TVL temporarily reached peaks of $180 billion. The $100 billion threshold is more of an interim step here, just a little more than half the battle.

But it’s still worth taking a closer look: Which blockchains is the entire TVL distributed across? Also what applications? After all, $100 billion is a large amount of money – a special fund, so to speak – so this might be worth a second look.

Ethereum appears to continue to be the top blockchain for DeFi. Almost 60 percent of the total value is locked in Ethereum smart contracts. If we add the Arbitrum and Optimism rollups as well as the Polygon sidechain, it’s a good 65 percent.

Besides Ethereum, only Tron and the Binance Smart Chain are actually relevant. Despite the extremely high market capitalization, Solana only plays a very small role, Cardano and Polkadot – both of which are also very highly valued – don’t even appear in the chart.

When it comes to applications, Liquid Staking is clearly the leader.

Liquid staking means that the native token of a blockchain – such as Ethereum – is put into a smart contract for consensus via Proof of Stake, which gives you a token in return, such as sETH, which receives interest from the staking but is completely liquid. This liquid staking and “restaking”, i.e. the re-staking of the staking tokens, make up relatively large parts of the DeFi landscape.

This is followed by loans through decentralized protocols, bridges that transport coins from one blockchain to the other, and decentralized exchanges (DEX) where you can exchange tokens. Apart from staking, not much has happened in the DeFi markets in the past two years.