A look into the stablecoin ecosystem

J.P.Morgan Chase announced last week that they are launching a stablecoin dubbed JPM Coin, representing U.S. dollars held in their accounts. In reality, JPM Coin is not so much a stablecoin but rather a settlement coin that will be used settle payments between J.P.Morgan's clients. It will supposedly reduce clients' counterparty and settlement risk while decreasing capital requirements. JPM Coin is built on a Quorum, a permissioned implementation of Ethereum developed internally, but J.P.Morgan Chase claims that it will eventually be "extended to other platforms" and "operable on all standard Blockchain networks."

Last year was the year of stablecoin. As new stablecoins hit the market and concerns over credit risk increased, Tether's dominance has fallen from 96 percent to about 73 percent in 2018. While some of the Tether traded volume is likely not real, Tether is still by far the most widely utilized stablecoin in terms of traded volume according to the reported volume by exchanges. In January, more than 90 percent of total stablecoin volume came from Tether. When looking at the trading velocity measured as the ratio between daily traded volume and supply in circulation, Tether has the highest by far.