Yield-bearing stablecoins just had their worst quarter in three years. Supply dropped by over $3.5 billion — a 15% decline — according to a new report from CEX.IO.
Ethena’s sUSDE took the hardest hit, losing 52% of its supply. That’s nearly $2 billion gone. Sky’s sUSDS fell 16%.
But here’s the interesting part: Treasury-backed products went the other way. BlackRock’s BUIDL grew 2%. Circle’s USYC climbed nearly 16%. Ondo Finance’s USDY surged 66%. The split between crypto-native yield products and traditional-asset-backed ones is getting wider.
The broader stablecoin market also contracted for the first time since Q3 2023. Total supply fell to $312 billion. Adjusted transaction volume dropped 5.5%.
Q1 had looked promising — supply increased by about $8 billion to a record $315 billion. But cracks were already showing. Retail-sized transfers dropped 16% in Q1. Automated activity made up roughly 76% of all stablecoin transaction volume by then.
Q2 made it worse. Transaction counts fell by 530 million to 4.48 billion — the largest quarterly decline on record. The one bright spot: transfers under $250 actually went up 5%, suggesting small peer-to-peer payments held up better than automated trading flows.
This matters because stablecoin supply is a key indicator of capital flowing into crypto. Talos, an institutional data provider, now flags declining stablecoin supply alongside spot Bitcoin ETF outflows and slower Bitcoin purchases by Strategy as three demand channels that weakened in Q2. A recovery in stablecoin supply would signal fresh money coming back in.
