The stablecoin market is facing changes after the big dump: a massive migration of billions, with funds choosing to say goodbye to "leverage" and embrace "real returns".

Author: Frank, PANews

The market crash on October 11 not only broke through the price defense line of crypto assets but also triggered a “billion-dollar migration” in the stablecoin sector.

Data shows that since October, the total market capitalization of stablecoins has shrunk from $308.7 billion to $302.8 billion, with nearly $6 billion leaving the market. In this tide retreat, the compliant stablecoin USDC has been hit hardest, with its supply on the Solana chain plummeting. Meanwhile, the previously popular “calculating stable new star” USDe has also seen a significant decline in issuance due to leveraged liquidation in the circular lending.

However, this is not merely a case of capital flight, but a brutal competition. When we clear the fog of data, we find that this is a shift from “speculation” back to “rationality”. Capital is flowing from high-leverage on-chain gaming fields to safer havens that have stronger compliance, smoother fiat channels, and real-world asset (RWA) returns.

Solana ecosystem and the “spiral double kill” of USDC

In this wave of market value shrinkage, USDC has become the largest “bleeding point.” Data shows that of nearly 6 billion dollars that have flowed out, USDC accounted for half, with its total market value sliding from 76.3 billion dollars to 73.5 billion dollars, a decrease of 2.8 billion dollars.

The decline of USDC is mainly due to the 18.24% decrease in USDC issuance on the Solana chain over the past month. On October 11, the total amount of USDC issued on the Solana chain was approximately 12.8 billion USD, which decreased to 8.7 billion USD by November 23, a reduction of 4.1 billion coins.

At the same time, the TVL on the Solana chain also dropped from 12.9 billion USD to 8.79 billion USD, with a decline similar to that of USDC's supply. Major DeFi protocols on Solana also experienced a significant decrease in TVL during this period. From this perspective, after the market crash on October 11, a large amount of funds on the Solana chain chose to redeem stablecoins directly to avoid market risks.

Taking Pump.fun as an example, according to on-chain analyst Yu Jin's monitoring, in the last week, the Pump.fun project team transferred 405 million USDC to Kraken. During the same period, 466 million USDC was transferred from Kraken to Circle, which is likely a withdrawal. These funds were obtained from the sale of PUMP to institutional private equity in June by Pump.fun. However, Pump.fun's co-founder Sapijiju responded by saying: “This is completely false information, Pump.fun has never cashed out.” He stated that this is merely a step in fund management.

Not only Solana, but Hyperliquid, known for its high-leverage derivatives trading, has also faced a decline in liquidity, with its stablecoin issuance dropping from $6 billion to $4.4 billion, a decrease of 25%. This all-encompassing contraction has directly impacted the performance of the issuer Circle in the U.S. stock market. Hit by poor revenue expectations and a sharp reduction in USDC supply, Circle's stock price has fallen from a peak of $240 to below its issue price at $71.3, and the once highly anticipated “compliant stablecoin unicorn” myth seems to be facing its first crisis since going public.

USDe Crisis and the Stablecoin Data Mix-up of Sui

If the decline of USDC is a cyclical deleveraging, then the crisis of USDe exposes the structural fragility of algorithmic stablecoins in a bear market.

Since October 10, the supply of USDe has been halved from 14.6 billion USD to 7.38 billion USD, and its price on Binance briefly decoupled to 0.65 USD due to a lack of short-term liquidity. The main reason for the decoupling was that liquidity providers collectively withdrew during the panic period at centralized exchanges, leading to an extremely thin order book. Meanwhile, although the official redemption mechanism of USDe is functioning normally, the “off-exchange settlement” behind it has a delay of several hours. This delay prevents arbitrageurs from quickly taking advantage of the price drop within a few minutes, making it impossible to pull the discount on CEX back to the 1 USD peg, thereby amplifying the magnitude of the decoupling.

The sharp decline in issuance is actually due to the market crash that caused the perpetual contract funding rate to plummet, even turning negative. This led to the “circular loan” leverage strategy that was widely deployed on lending platforms like Aave and Morpho losing its economic basis. As the yield fell below borrowing costs, traders were forced to massively deleverage and close positions, triggering a contraction in the supply of USDe. In retrospect, OKX CEO Star stated on the X platform: “USDe should not be viewed as a stablecoin pegged 1:1 to the dollar; it is a tokenized hedge fund.”

Even though Ethena set a record for fee capture of $151 million in Q3 this year, it still cannot withstand the loss of market confidence due to a significant drop in yield. Currently, although the yield on USDe has rebounded to over 5%, the overall supply and trading volume are both declining.

Amidst extreme anxiety in the market and a thirst for the next growth point, a data blunder regarding the Sui public chain became a side story. On November 24, Artemis data showed that the supply of stablecoins on the Sui chain increased by $2.4 billion. Social media speculated that this could be certain institutions or smart money actively positioning themselves in some assets on the Sui chain. Even the official Sui team participated in the interaction regarding this news, responding with: “stablesmaxxing.”

However, after an investigation by PANews, it was found that this might just be a misunderstanding. After carefully comparing multiple data panels, USDC is indeed the most issued stablecoin on Sui, with a current issuance market value of approximately $480 million. Other stablecoins have issuance amounts on Sui in the tens of millions of dollars. According to data from Defillama, the total amount of stablecoins in the current Sui ecosystem is about $653 million. If there is an inflow or increase of $2.5 billion in a single day, it would mean that the supply of stablecoins on Sui would increase by about 4 times.

The on-chain information also shows that the issuance of USDC on Sui is 482 million USD, with the largest holding address being Binance Exchange with approximately 148 million tokens. Subsequently, Artemis also updated this data, indicating that in the past seven days, the stablecoin supply on Sui increased by 117 million USD.

A new direction for risk aversion, embracing returns

After funds were withdrawn from high-risk areas, they did not completely disappear, but flowed into safer and more functional assets.

During the market downturn, USDT once again proved its dominance as the “number one” stablecoin, with its total market value not only unaffected but repeatedly reaching new highs of 184.7 billion dollars.

Compared to the decline of USDC, other compliant stablecoins have shown significant growth. After the market crash on October 11, the issuance of PYUSD has increased against the trend, rising from $2.5 billion to $3.6 billion, an increase of nearly 50%. In the segmentation of public chains, the growth of PYUSD mainly comes from the growth of the Ethereum mainnet, which has increased by 57% in the past month.

On November 9th, data released by Token Terminal showed that PYUSD has become one of the fastest-growing tokenized assets with a market capitalization exceeding $1 billion. Compared to other stablecoins, PYUSD's core advantage may lie in its convenient fiat exchange channels and relatively stable yields. PYUSD had previously maintained an APY of over 10% on the Solana blockchain through subsidized returns. In addition, the compliance of PYUSD is also one of the key factors considered by many institutional investors.

In addition, the issuance of the yield-bearing stablecoin USYC, also issued by Circle, has seen a 45% increase in the past month, with a total issuance increase of approximately $500 million. This indicates that during periods of market turbulence, institutional investors are no longer content with holding zero-yield cash and are unwilling to take on the high risks of DeFi, instead preferring stable returns anchored to real-world assets (RWA) like U.S. Treasuries.

Data from RWA.xyz also shows that the issuance of RWA assets has not been affected by the recent market downturn and is still experiencing stable growth. It increased from 33 billion dollars on October 11 to 36 billion dollars, a rise of 10%.

A market turbulence has now become the touchstone for the stablecoin market. It not only distinguishes which stablecoins are primarily used for high-leverage trading and which serve as investment targets for large institutions, but also reflects that the crypto market has officially bid farewell to the “wild era” that solely relied on on-chain leverage to drive scale.

In contrast, the counter-trend breakthrough of PYUSD and the steady growth of RWA assets demonstrate that funds have begun to vote with their feet. During turbulent times, more convenient fiat channels, more transparent compliance endorsements, and real returns based on U.S. Treasury bonds are the core competitive advantages for retaining funds.

The outflow of $6 billion may have given us a chance to reflect. The second half of the stablecoin war is no longer a competition of printing speed, but a contest of scenarios, trust, and the quality of underlying assets. For issuers, the only ticket to the next bull market will be how to evolve from being a “fuel” that serves on-chain speculation to a “bridge” in financial and trade processes.