Market Analysis

  • Stablecoin market cap: $140B

  • Crypto-backed stablecoin market cap: $6.75B

  • Avalanche Stablecoin market cap: $1B

  • Avalanche crypto-backed stablecoin market cap: $50M (excluding USP)

  • AVAX market cap: $17B

  • sAVAX market cap: $360M

Avalanche ecosystem

LSTfi is becoming a major catalyst for the growth of the Ethereum ecosystem as it opens new opportunities for the use cases of ETH. By unlocking the locked ETH liquidity, LSTfi creates new financial tools that empower the ETH and Ethereum ecosystem. Even though the Ethereum LSTfi ecosystem is in its early phase, it has attracted many builders and investors to the ecosystem while also preserving the existing ones so that it can continue its dominance against L1s.

Moreover, stablecoins are one of the most important product-market fits in the ecosystem. It is clear that stablecoins are adopted not just by degens but by daily users, so it can be assumed that for an L1 protocol to challenge Ethereum's dominance and become the main L1 protocol, it should have a solid stablecoin ecosystem. However, until now, the Avalanche ecosystem has not been able to lead or attract a major stablecoin liquidity in the chain. With its innovative model, the Stable Jack can pioneer both the stablecoin and LSTfi revolution in the Avalanche ecosystem. While the protocol can bring stablecoin liquidity to the ecosystem, it can utilize AVAX LSTs so that it can open new opportunities for AVAX and AVAX LSTs which will in turn increase the demand for the Avalanche ecosystem

Considering that there is no competitor in both the stablecoin and LSTfi categories in the Avalanche ecosystem, we believe that Stable Jack can fill this gap in the market.

Competitors

  • DAI - an over-collateralized CDP stablecoin with a $5.25b market cap.

  • FRAX - a stablecoin that is collateralized with USDC with a $670m market cap.

  • LUSD - a stablecoin backed by ETH with a $200m market cap.

  • eUSD - a stablecoin that is reserved by staked ETHs with a $115m market cap.

  • crvUSD - a CDP that employs the LLAMMA mechanism with a $150m market cap.

  • fETH - a floating stablecoin that is decomposing ETH to issue a stablecoin with a $8m market cap.

Problems in the stablecoin ecosystem

  • CDP model stablecoins are not scalable as they require over-collateralization while carrying the liquidation risk, as a result, they are not capital-efficient.

  • CDP stablecoins depend on the demand for CDP, not stablecoins.

  • CDP models require high borrowing costs.

  • Fiat-backed stablecoins are vulnerable to censorship resistance and centralization risks.

  • Fiat-backed stablecoins do not share the inherent yield of USD.

  • Fiat-backed stablecoins are vulnerable to TradFi and macro risks.

Total Addressable Market

Based on the data on December 26th, 2023:

  • On-chain demand for leveraged AVAX: $7M

  • CEX demand for leveraged AVAX: $412M

According to the statistics, we can say that the demand for leveraged AVAX is around $300M at this point, however, it can be assumed that as the AVAX market grows, the demand for leveraged AVAX as well. Moreover, considering that xAVAX provides a better solution compared to regular AVAX leverage in terms of no funding fees and unlikely liquidation risk, it can attract more capital.

Leveraged AVAX demand is a great indicator of the scalability of Stable Jack, as the supply of aUSD depends on the supply of xAVAX. An example: Consider that all the leveraged AVAX demand is realized via Stable Jack, in that scenario: xAVAX supply: $300M aUSD supply: can reach up to $900M As a result, Stable Jack can add a stablecoin supply of up to 3 times the leveraged AVAX demand to the Avalanche ecosystem without any costs.

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