Solana Stablecoin Supply Hits YTD High As Traders’ Risk Appetite Rises

Alongside surging markets, Sky DAO’s $USDS launch propels Solana’s circulating stablecoin supply to yearly highs.

Published: Nov 27, 2024 at 18:28

Solana’s circulating stablecoin supply has roared to new yearly highs, buoyed by meteoric trading activity in the network’s DeFi landscape.

Traders across the ecosystem are demonstrating a high-risk appetite, giving stablecoin lenders dramatically boosted APYs.

Beyond rising inflows of heavyweight stablecoins like Circles’ $USDC and Tether’s $USDT, one of the industry’s longest-standing EVM-based decentralized stablecoins has finally migrated to Solana.

Stablecoin Supply on Solana Cracks 4.6B

Inspired by rising tides in wider crypto markets, Solana’s stablecoin landscape is booming to new YTD highs. Since November 1st, the network’s circulating stablecoin supply has climbed 22.78%, rising from 3.73B to hover around yearly highs of 4.58B based on DefiLlama data.

stablecoins

In addition to surging supplies of popular mainstays like $USDC and $USDT, the Solana ecosystem has also welcomed several newcomers to its stablecoin scene.

SKY, formerly MakerDAO, finally deployed the newly rebranded $USDS on Solana, while Solayer’s yield-bearing stablecoin $sUSD has also made its onchain debut. Collectively, these new stablecoins make up 2.24% of Solana’s stablecoin market share.

Meanwhile, PayPal’s $PYUSD has been rapidly falling out of favor. After enjoying impressive month-on-month growth earlier this year thanks to generous reward campaigns, $PYUSD usage has stagnated. At press time, $PYUSD supply on Solana is down 48.7% on a monthly time frame, dropping to 143.5M.

Lenders Enjoy High-Leverage Market

In recent weeks, both Bitcoin and Solana have broken previous all-time highs, flirting with price discovery in uncharted territory.

After breaking out from a sustained consolidation period, market participants are refueled with fresh optimism and bullish sentiment, leading to a heightened appetite for risk.

As a result, Solana DeFi’s stablecoin lenders are enjoying elevated yield opportunities, with borrowers willing to pay high rates for access to greater liquidity.

According to Lulo Finance, a popular Solana yield aggregator, market volatility is a boon for lending markets, with platforms like Drift Protocol and Kamino Finance offering lenders over 40% APY on deposited stablecoins.

Surging lending rates across Solana’s various DeFi protocols have pushed Lulo’s Directed Liquidity (DL), a metric similar to TVL, to new all-time highs, with Lulo currently handling over $58M in DL.

Solana Leads Ethereum in Bi-Directional Flows

Onchain traders and DeFi users continue to choose Solana over the Ethereum mainnet, its greatest Layer-1 rival.

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According to Artemis Data, bi-directional asset flows between the two chains favor Solana. In the last 30 days, net inflows indicate that $318.4M worth of crypto assets have left Ethereum for Solana. However, this figure doesn’t account for flows to Ethereum Layer-2s, including Base, Arbitrum, and Optimism.

While stablecoins are arguably the least exciting assets of a crypto bullrun, fluctuating supplies and yield rates can serve as valuable indicators of market health.