The composable nature of Ethereum begets the layering of defi primitives and assets. One clear, but a generally underappreciated example of this is ‘smart’ stablecoins. Before describing ‘smart’ stablecoins, let’s first appreciate stablecoin’s impressive year. Stablecoin’s have found a clear product-market fit in 2020 most aptly represented by USDT’s circulating supply growth from ~$4.1 billion to ~$15.2 billion. What is equally, if not more important, is where these stablecoins are going and trending towards. Tether supply in smart contracts has grown from ~1.9% to 10.9% percent YTD. USDC supply in smart contracts has grown from ~6.7% to 56.7% YTD. This is indicative of the general utility (al be it much of it spurred by yield farming speculation) of defi protocols driving stablecoin demand.
While catalyzed by the yield farming craze, digging a little further, we can