According to VanEck’s April 3 market update stablecoins show strong growth even though their parent platforms Ethereum and Solana worry investors.
In a period of market instability and economic unrest cryptocurrencies industry participants see stablecoins as their most reliable option. VanEck reports market capitalization of stablecoins increased $10 billion in March 2023.
Web3 maintains strong growth momentum through stablecoins despite overall market decline driven by economic conflicts. The success of stablecoins keeps growing at the same time Bitcoin Contract platforms decline in performance.
Ethereum, Solana Decline as Trading Dips
The performance of Ethereum and Solana declined sharply as their trading volume and revenue figures fell everywhere. Ethereum recorded network L2 transaction decreases by 18% while Solana’s DEX platform faced more than 50% usage reduction during the period.
The market now favors stablecoins more than smart contract systems because investing patterns between them have changed. Ongoing economic instability plays a part in creating these split results. The uncertainty of international trade wars combined with US President Donald Trump’s trade policies causes traders to put their money into stablecoins due to their superior stability.
In an April 4 X post Matthew Sigel from VanEck Research highlighted that economic instability worldwide leads investors to turn to crypto especially stablecoins as a market buffer against volatility. In his April 4 X post Matthew Sigel views economic instability as a powerful factor pushing people toward crypto assets.
The general increase in stablecoin adoption continues at a strong pace even though stablecoin yields dropped from 10% earlier this year to between 3% and 5%. Research organizations now buy stablecoins at rates comparable to US Treasuries despite this growth in demand.
Solana’s DEX Activity Drops Amid Memecoin Decline
March marked a 26% boost in the creation of tokenized Treasury Bills which represents the biggest stablecoin generating instrument by increasing past $5 billion total issuance. The Solana crypto platform suffered strong setbacks from past success in the crypto sector. Solana lost its market lead to Ethereum this year but its DEX figures declined intensely by 66% and 53%.
Most of Solana’s network activity slowdown results from reduced interest in trading memecoins which drove transactions on its platform earlier. When Libra a memecoin gained and lost support from Argentine President Javier Milei on February 14, it cost the market $4.4 billion and reduced trust in this particular category.
The Ethereum network performed better than Solana during this market downturn since trading volumes on L2 platforms dropped by only 18%. During the last week of March Ethereum received their lowest Layer-2 fees payment of the year.
Although other crypto markets experience market volatility stablecoins keep growing steadily. The story of digital finance continues to show both stablecoin success while Ethereum and Solana struggle to maintain their position.