Stablecoin supply

Aggregate stablecoin supply is the closest thing crypto has to a money-supply figure. It grows when dollars enter the system and shrinks when they leave.

What the three backing models mean

Why supply matters more than price

A stablecoin trading at $1.00 tells you almost nothing — that is its job. The informative number is how much of it exists. Supply grows when someone wires dollars to an issuer and receives tokens, which is dry powder arriving on exchanges. Supply shrinks on redemption, which is capital leaving the ecosystem entirely. Sustained growth in aggregate supply has historically preceded periods of rising prices, though as a coincident measure of flows rather than as a predictor.

Where the risk actually sits

• Issuer risk. A fiat-backed stablecoin is an IOU. It is worth a dollar as long as the issuer can and will redeem it.
• Reserve composition. Treasuries are not the same as commercial paper or loans to affiliates. Read the attestation, not the headline.
• Banking access. USDC briefly lost its peg in March 2023 because reserves sat in a bank that failed. The reserves were real; the access was not.
• Algorithmic designs. Terra's UST was the largest of these and went to zero in days, taking about $40bn with it. Treat any yield-bearing “stable” asset as a credit product.

Source: DefiLlama stablecoin data, refreshed at build time.