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Followingstablecoin market: winner-take-all pattern dominated by a few giants
Although there are thousands of stablecoins on the market, according to research by Lorenzo Valente, research director of ARK Invest, only two stablecoins have truly crossed the threshold of substantive significance. A stablecoin is a type of cryptocurrency designed to maintain value stability, usually achieving this goal by pegging it one-to-one to traditional fiat currencies such as the U.S. dollar. They are widely used for payments, transactions and cross-border money transfers. ARK Invest is an asset management company founded by Cathie Wood.
Valente published an article on Platform X (formerly Twitter) pointing out that stablecoins are assets with network effects. The larger the scale, the more difficult it will be for competitors to catch up. He cited data from Blockworks and Artemis to show that although the number of stablecoins with a market value of more than $1 million has climbed to about 135, the number has dropped sharply as the threshold has been raised: there are about 90 stablecoins with a market value of more than $10 million; those with a market value of more than $100 million have dropped to about 40; while there are only 12 types with a market value of more than $1 billion.
The "$10 billion club" is shrinking rather than expanding
The most eye-catching pattern appears at the top. The number of stablecoins with a market value of more than US$10 billion peaked at four in 2022, and then decreased to only two: the USDT issued by Tether and the USDC issued by Circle. Salvador-based Tether issued the world's largest stablecoin by market value, mainly backed by U.S. Treasury bonds. Circle, a US-based listed fintech company, issued USDC.
ARK Invest not only supports this argument in terms of opinion, but also takes action at the capital level. On August 31, ARK Invest purchased 35,192 shares of Circle Internet Group (NYSE: CRCL), valued at approximately $3.36 million.
Valente believes that entering the US$10 billion level is already extremely difficult. He said that in the foreseeable future, competition at the $100 billion level is likely to be limited to these two players, while the $500 billion market may be dominated by a single publisher for at least the next two years.
Markets with thousands of tokens but few winners
Data are consistent with broader adoption research. A report released by BVNK in partnership with YouGov, Coinbase and Artemis shows that in the past 12 months, half of stablecoin holders have increased their positions, with 56% planning to increase their holdings further. However, this growing demand is concentrated on a few mature tokens rather than being dispersed among thousands of tokens.
Currently, the total supply of the stablecoin market has exceeded US$300 billion, but the vast majority of its value is still concentrated in the hands of Tether and Circle. Valente's chart shows that this dynamic pattern will only solidify more and more over time.
