INTRODUCTION
Stablecoins are a structural part of any decentralized ecosystem. They facilitate trading on exchanges, transactions and payments. One of the most meaningful use cases of stablecoins is allowing users to hold non-volatile assets on blockchains.
They are also incremental to DeFi. Protocols need deep liquidity to function appropriately, which can only be obtained from a stable asset like USDC.
A thriving on-chain Stablecoin ecosystem creates the conditions for the development of DeFi products, such as Liquid Staking products. LSTs are a key part of the DeFi ecosystem, as they allow users to stake their native tokens and receive a liquid token, which can be used in DeFi protocols. This is especially important for DeFi power users looking to obtain more higher yields, and actively manage their positions and strategies.
STABLECOIN SUPPLY
Solana’s stablecoin market cap decreased 2.3% quarter-over-quarter, although it has recorded a high of $1.70B. Although the Stablecoin market showed a slight decrease in the last 3 months, it has shown resilience particularly when compared with other ecosystems like Polygon.
Solana’s stablecoin market cap is at ~$1.5B at the time of writing. When looking at stablecoin dominance, USDT and USDC hold the vast majority of market share, with around 98% of total stablecoins in the Solana ecosystem. USDT has 56% dominance and USDC has 42% dominance. UXD, PAI and USDH represent ~2% of the total stablecoin market capitalization.
SOLANA STABLECOINS
Solana stablecoins are stablecoins that are native to the Solana blockchain and not issued or minted anywhere else. UXD Stablecoin (UXD), Parrot USD (PAI) and USDH are the three largest Solana stablecoins. UXD has seen a period of sustained growth from demand generated by DeFi protocols such as marginfi. UXD’s market cap increased by 200% in the third quarter, while PAI and USH remained flat.
LIQUID STAKING TOKENS
Liquid Staking enables users to stake their crypto assets for network participation while still maintaining access to their liquidity. Instead of locking up tokens, users delegate their assets to a third-party service provider, receiving liquid tokens in return. These liquid tokens are tradable and widely accepted as collateral within DeFi, allowing users to enjoy staking rewards without sacrificing flexibility. Liquid staking aims to make staking more accessible and attractive to a broader audience by addressing the liquidity issue.
Marinade’s mSOL is the largest LST protocol with 75,258 holders of its token, followed by Lido’s stSOL with over 31,000 holders. JitoSOL and bSOL are the third and fourth biggest LSTs, with 6,482 and 5,645 holders, respectively.
Conclusion
Solana native stablecoins like UXD are seeing strong growth due to DeFi incentives on protocols such as marginfi. The Solana Liquid Staking market is growing as the competition between projects like Marinade, SolBlaze and Jito intensifies with incentives like points systems, referral networks and more. Ultimately, the ecosystem continues to show resilience and activity, in a time when the broad market is losing steam.
Read the full Q3 Report covering DeFi, NFTs, DEX, Network Statistics, Decentralization Metrics and more - https://www.step.finance/reports/solana-q3-report