Ethereum provides a dominant network for stablecoins, such as Tether, Dai or USDC. However, the Stablecoins have already achieved more transactions than Ethereum itself. Do they parasitize on the ETH network?
Stablecoins on the rise
Just a week ago, Messari found that the amount of funds transferred using stablecoins exceeded the funds transferred using the ETH cryptocurrency in the Ethereum network.
1/ Stablecoin transfer value has now flipped ETH on Ethereum ? pic.twitter.com/wwlNF2ObOV— Ryan Watkins (@RyanWatkins_) January 29, 2020
There was a phenomenon called flippening, when the original ratio was reversed and now the stablecoins have a majority.
Parasitizing on ETH
Some stablecoins are bound to the US dollar, some are bank stablecoins, and some are secured by cryptocurrencies. Overall, they represent more than $ 3.2 billion in assets on the Ethereum network.
Mythos Capital founder Ryan Sean Adams responded to the twitter post and asked if stablecoins parasitize on Ethereum. He concluded that they were not at all parasitic for Ethereum, on the contrary.
Competition for PayPal
In particular, stablecoin Dai is very advantageous for Ethereum cash premiums over traditional banks. Stablecoins are also a substitute for the global BTC transmission characteristics and are settled through the traditional US dollar-backed system.
If the situation arises that stablecoins compete with PayPal, for example, it is a big win for Ethereum. Adams also pointed out that any use of a smart contract would reduce ETH supplies and make it more scarce. This will bring more investors into the Ethereum ecosystem, increasing demand.
This can result in more developers, more tools, improved wallet, more protocols, and a better Ethereum cryptocurrency ecosystem.
Stablecoins are not parasitic for the Ethereum network, but rather the opposite. They are a big reason for the following bullish trend.