The report starts off by quoting Draper:
“The DeFi world is almost as technologically advanced as the dollar, and when it is, there will be no one who will want to accept politically manipulable currencies like dollars anymore.”
Not fiat replacement
The report focuses on two stablecoins: crypto-backed Dai (DAI) and fiat-backed USDC (USDC). It comes to the conclusion that stablecoin users are not looking to these instruments as replacements for the dollar, but instead prefer them for their resistance to censorship:
“People are not turning to DeFi to replace the dollar. Instead, they are using DeFi to avoid censorship; own their assets; and build financial service without permission.”
The Flow of Dai in the crypto ecosystem. Source: Flipside Crypto.
Comparing the two coins, the report concludes that Dai gets greater utilization in DeFi applications, whereas Coinbase’s USDC enjoys greater traction with centralized exchanges. This is to be expected and is in line with the previous research by TokenAnalyst, which also emphasized that Dai was better integrated into the DeFi ecosystem than USDC or Tether (USDT).
The Flow of USDC in the crypto ecosystem. Source: Flipside Crypto.
Since Coinbase introduced a USDC/DAI trading pair last year, the exchange serves as connector node for the two stablecoins.
Although it is clear that the stablecoins are far removed from replacing the U.S. dollar as the dominant global player, it does not necessarily prove Tim Draper wrong. It may be that the DeFi space is still in its infancy, just making the first painful steps into a new brave world.