The increase in DeFi protocols and token demand in liquidity pools could be leading to a major surge in stablecoin supply.

According to Coin Metrics co-founder Nic Carter, present supply levels of stablecoins Binance USD, Dai, HUSD, Paxos Standard Token, USD Coin, USDK, Tether, USDT_ETH, and USDT_TRX has been rising by approximately $100 million every day for nearly two months, reports Cointelegraph.

Carter said on Twitter: “Everyone got so excited about DeFi no one pointed out that stablecoins have been adding $100m/day since mid-July. DeFi yields/interest rates are clearly a vacuum sucking in a lot of stablecoins.”

Stablecoins are in high demand among tokens used in liquidity pools for DeFi protocols, which have been increasing this year, providing greater yields in the competition to attract locked funds.

The most lent and borrowed stablecoins in the Compound protocol are DAI and USDC, as well as being the most borrowed stablecoins in Aave.

Nevertheless, Tether still holds 80% dominance in the stablecoin market. As per data from CoinMarketCap, Tether’s total market capitalisation rose from $9.2 billion in mid-July to over $13.7 billion to date, close to a 50% rise.

During the same time frame USDT’s trading volume has increased around 150%, from $21.9 billion to more than $54 billion.

In addition, governor of the Bank of England, Andrew Bailey announced on Friday that stablecoins could offer some “useful benefits” for UK investors, but cautioned that the coins “must have equivalent standards to those that are in place today for other forms of payment types and the forms of money transferred through them."

The BoE governor went on to stress the need for coordinated international regulations on stablecoins: "A global stablecoin is a cross-border phenomenon. It can be operated in one jurisdiction, denominated in another’s currency, and used by consumers in a third. The regulatory response must match this.”