The stablecoin market has contracted significantly following the KelpDAO exploit, with $892 million in net outflows over the past week. Despite the capital exodus, total stablecoin market capitalization remains at $320.65 billion, according to data from DefiLlama. The incident triggered a broader DeFi unwind, forcing leveraged positions to close across multiple protocols.
USDT Strengthens as Safe-Haven Choice
Tether's USDT has emerged as the primary beneficiary of the turmoil. Its market cap rose by 1.55% to $189.78 billion, commanding a 59.19% share of the total stablecoin market. This translates to an influx of approximately $2.89 billion over the week. In contrast, Circle's USDC slipped 1.01% to $77.79 billion, losing about $794 million in the same period.
Sky USDS (formerly MakerDAO) dropped 1.89% to $8.27 billion, while its older stablecoin DAI bucked the trend with a 1.55% gain to $4.67 billion. World Liberty Financial's USD1 posted the strongest weekly growth among top five stablecoins, rising 4.34% to $4.39 billion.
USDe Leads Losses with $2 Billion Plunge
The most dramatic decline came from Ethena's USDe, which plummeted 34.39% to $3.82 billion, losing over $2 billion in market cap. PayPal's PYUSD also suffered a steep 16.06% drop to $3.445 billion. Other notable losers include USDG (-5.71% to $1.114B), FDUSD (-1.46% to $2.34B), and smaller stablecoins like FRAX and GUSD which also recorded weekly declines.
Data suggests the market is still recovering from the shock rather than finding solid footing. Capital did not exit indiscriminately but flowed purposefully toward dominant issuers while weaker structures experienced steeper contractions. Restoring stability in the coming weeks will depend less on price movements and more on rebuilding trust in DeFi's underlying mechanisms.