Author: Frank, PANews
The market crash on October 11 not only breached the price defenses of crypto assets but also triggered a 'hundred-billion-dollar migration' in the stablecoin sector.
Data shows that since October, the total market capitalization of stablecoins has decreased from $308.7 billion to $302.8 billion, with nearly $6 billion flowing out of the market. In this downturn, regulatory-compliant stablecoins $USDCoin (USDC.CC)$ have been hit the hardest, with their supply on the Solana chain experiencing a cliff-like drop. Meanwhile, the previously high-profile 'new algorithmic stablecoin star' USDe has also seen a sharp decline in issuance due to leveraged liquidations from circular lending.
However, this is not merely a case of capital flight but a ruthless competition. When we sift through the data, we uncover a shift from 'speculation' back to 'rationality,' as funds flow from highly leveraged on-chain gambling arenas into safer harbors offering stronger compliance, smoother fiat channels, and real-world asset (RWA) backed returns.
The 'Double Spiral Decline' of the Solana Ecosystem and USDC
In this wave of market contraction, USDC became the biggest 'bleeding point.' Data indicates that out of the nearly $6 billion outflow, USDC accounted for half, with its total market cap dropping from $76.3 billion to $73.5 billion, a decline of $2.8 billion.
Behind the decline of USDC lies primarily the drop in USDC issuance on the Solana chain over the past month, which fell by 18.24%. On October 11, the total amount of USDC issued on the Solana chain was approximately $12.8 billion; by November 23, it had decreased to $8.7 billion, representing a reduction of 4.1 billion tokens.
During the same period, the Total Value Locked (TVL) on the Solana chain also dropped from $12.9 billion to $8.79 billion, mirroring the decline in USDC’s supply. Additionally, top-ranked DeFi protocols within the Solana ecosystem experienced significant TVL reductions during this phase. From this perspective, following the market crash on October 11, large amounts of capital on the Solana chain opted to directly redeem stablecoins to mitigate market risks.
Taking Pump.fun as an example, according to on-chain analyst Yujin's monitoring, in the past week, the Pump.fun team transferred 405 million USDC into Kraken. During the same period, 466 million USDC was transferred out of Kraken, which likely indicates cashing out. These funds were obtained from Pump.fun’s private placement sale of PUMP tokens to institutional investors in June. $Circle (CRCL.US)$ However, Sapijiju, the co-founder of Pump.fun, responded by stating: "This is completely false information; Pump.fun has never cashed out." He also explained that this was merely a step in fund management operations.
It’s not just Solana; Hyperliquid, known for its high-leverage derivatives trading, has also experienced a liquidity decline. Its stablecoin issuance fell from $6 billion to $4.4 billion, marking a 25% drop. This broad contraction directly impacted the performance of issuer Circle in the U.S. stock market. Hit by both weak revenue expectations and a sharp reduction in USDC supply, Circle's share price plummeted from its peak of $240 to below the issue price at $71.3. The once highly anticipated “compliant stablecoin unicorn” narrative now seems to be facing its first crisis post-listing.
The USDe Crisis and Sui’s Stablecoin Data Misunderstanding
If the decline of USDC can be attributed to cyclical deleveraging, then the crisis surrounding USDe has exposed the structural fragility of algorithmic stablecoins during bear markets.
Since October 10, the supply of USDe has been halved from $14.6 billion to $7.38 billion, with its price on Binance briefly losing its peg to $0.65 due to short-term liquidity shortages. The primary reason for depegging was the collective withdrawal of liquidity providers from centralized exchanges amid panic, leading to extremely thin order books. Meanwhile, although USDe’s official redemption mechanism functioned normally, the “off-exchange settlement” behind it introduced delays of several hours. This delay prevented arbitrageurs from quickly profiting within minutes during flash crashes, thus failing to restore the discount on CEX back to the $1 peg, amplifying the extent of depegging.
As for the sharp drop in issuance, it was primarily caused by the market crash, which led to a steep decline in perpetual contract funding rates, even turning negative. This rendered the previously widespread “recycled loan” leverage strategy deployed on lending platforms like Aave and Morpho economically unviable. As yields fell below borrowing costs, traders were forced to unwind their leveraged positions on a large scale, triggering a contraction in USDe supply. In response, OKX CEO Star posted on the X platform: “USDe should not be considered a stablecoin pegged 1:1 to the dollar; it is a tokenized hedge fund.”
Despite Ethena setting a record high of $151 million in fee capture in Q3 this year, it still could not withstand the loss of market confidence driven by a significant drop in yields. Although USDe’s yield has rebounded above 5%, both its overall supply and trading volume remain in decline.
Amidst extreme market anxiety and the search for the next growth opportunity, a data misinterpretation involving the Sui public chain became a side note. On November 24, Artemis data showed a $2.4 billion increase in stablecoin supply on the Sui chain. Social media speculated that this might indicate active positioning by certain institutions or smart money in specific assets on the Sui chain. Even the official Sui account joined the conversation, replying with: “stablesmaxxing” (maximizing stablecoins).
However, after an investigation by PANews, it appears this may have been a false alarm. Upon carefully comparing multiple data panels, USDC is indeed the most widely issued stablecoin on Sui, with a current market capitalization of approximately $480 million. The issuance of other stablecoins on Sui amounts to tens of millions of dollars each. According to data from Defillama, the total value of stablecoins in the Sui ecosystem is approximately $653 million. If there were a single-day inflow or issuance of $2.5 billion, it would imply that the supply of stablecoins on Sui would increase nearly fourfold.
On-chain information also shows that the issuance of USDC on Sui is $482 million, with Binance exchange holding the largest position at approximately 148 million tokens. Subsequently, Artemis updated this data as well, showing that the supply of stablecoins on Sui increased by $117 million over the past seven days.
A new direction for risk aversion: embracing returns.
Funds withdrawn from high-risk areas did not disappear entirely but instead flowed into safer and more functional assets.
During the market downturn, $Tether (USDT.CC)$ once again demonstrated its dominance as the leading stablecoin, with its total market capitalization not only remaining unaffected but also repeatedly hitting new highs, reaching $184.7 billion.
In contrast to the decline of USDC, other compliant stablecoins experienced noticeable growth. Following the market crash on October 11, PYUSD saw a counter-trend increase in issuance, growing from $2.5 billion to $3.6 billion, representing a rise of nearly 50%. In terms of blockchain breakdown, PYUSD's growth was primarily driven by increases on Ethereum mainnet, where it grew by 57% over the past month.
Data released by Token Terminal on November 9 showed that PYUSD became one of the fastest-growing tokenized assets with a market capitalization exceeding $1 billion. Compared to other stablecoins, PYUSD's core advantages may lie in its convenient fiat conversion channels and relatively stable yield. PYUSD had previously maintained an APY above 10% through subsidized returns on the Solana chain. Additionally, PYUSD’s compliance is one of the key factors considered by many institutional investors.
Moreover, USYC, another yield-bearing stablecoin issued by Circle, saw its issuance grow by 45% over the past month, with total issuance increasing by approximately $500 million. This indicates that during periods of market volatility, institutional investors are no longer satisfied with holding zero-yield cash nor willing to bear the high risks associated with DeFi. Instead, they prefer stable returns anchored to RWAs such as U.S. Treasury bonds.
Data from RWA.xyz also shows that the issuance of RWA assets has not been affected by the recent market downturn and remains on a steady growth trajectory. The value increased from USD 330 billion on October 11 to USD 360 billion, reflecting a 10% rise.
A period of market turbulence has now become a litmus test for the stablecoin market. It not only allows the market to distinguish between stablecoins primarily used for high-leverage trading and those serving as wealth management instruments for large institutions but also reflects that the crypto market has officially moved beyond the "wild west era" driven solely by on-chain leverage.
In contrast, PYUSD’s countercyclical breakout and the steady growth of RWA assets demonstrate that capital has begun to vote with its feet. During turbulent times, more accessible fiat currency channels, transparent compliance endorsements, and real yields based on U.S. Treasury bonds are the core factors in retaining funds.
The outflow of USD 60 billion may offer an opportunity for reflection: the next phase of competition in the stablecoin market will no longer be about the speed of minting but rather about use cases, trust, and the quality of underlying assets. For issuers, the key to entering the next bull market lies in evolving from being mere "fuel" for on-chain speculation to becoming a "bridge" in financial and trade ecosystems.
Editor/Doris
