This article is from:Hashpie (ID: hashpie), Author: LucyCheng, forwarded with authorization.
This article is from:
Hashpie (ID: hashpie)
, Author: LucyCheng, forwarded with authorization.
In the absence of competitors from 2017 to 2018, USDT has occupied more than 90% of the stable currency market for a long time. At that time, the regulatory attitudes of local governments were unclear, and some fiat currency trading channels were tightened and other backgrounds, so that USDT achieved a nearly 300-fold increase in market value in less than two years; its influence reached even higher—abnormal fluctuations can shake the entire cryptocurrency market. Degree.
Figure: USDT market value and trading volume changes over time; Note: On the afternoon of October 16, 2018, the sharp drop in USDT prices caused panic in the market, and the price of Bitcoin soared rapidly, with an increase of more than 15% in just two hours
However, the good times did not last long. After negative events such as over-issued doubts, a flash crash in October currency prices, difficulties in depositing and withdrawing US dollars, and revisions to the official website description, USDT’s reputation continued to decline, and other stable currencies took the opportunity to seize the city. The issuance and transaction volume of stablecoins led by TUSD, PAX, GUSD, USDC, and DAI have increased significantly in the market, and currently occupy more than 25% of the market share. Among these latecomers who have taken advantage of the trend, there are many strong competitors who can compete with USDT; but it cannot be ignored that security and credit risks are not the patents of USDT, and other stable currencies also have related problems.
image descriptionUSDT currently occupies 66.6% of the stablecoin market; while USDC, TUSD, PAX, DAI, and GUSD account for 7.5%, 6.8%, 3.9%, 3.1%, and 2.2% respectively.Short board for exchange with legal tender
As a medium of exchange for cryptocurrencies, stablecoins can be roughly divided into three types: fiat currency mortgage, digital asset mortgage, and unsecured algorithm bank type (
For more information, please check the previous article "USDT Premium? There are N kinds of stable coins to choose from》
). Among them, the stable currency based on legal currency not only plays a certain role in storing value and avoiding risks, but its main function is to provide investors with an interface with the legal currency world.
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However, the highly centralized management and opaque operation of USDT has been questioned whether it can be effectively exchanged with the US dollar at a ratio of 1:1. Recently, Tether’s official website changed the structure of reserve assets and Bitfinex encountered difficulties in depositing and withdrawing between USDT and USD. It confirmed the market's allegations that its dollar reserves were insufficient. Although most of the stablecoins issued in the later stage have introduced trust accounts and audit institutions to improve their own transparency, there are still defects in the exchange between them and legal tender.
Specifically, due to the restrictions of the redemption process and the minimum processing amount, etc., ordinary users mostly look for OTC platforms for fiat currency exchange; however, due to the short launch time of new stable currencies, there are relatively few fiat currency exchange platforms that currently support related currencies . Taking CK.USD with a daily trading volume of hundreds of millions of dollars as an example, only BCEX and Allcoin currently support its OTC transactions; while the only large exchange that provides PAX USD trading channels is ZB.COM.
In order to alleviate this situation, TrueUSD announced the launch of real-time accounting service and automatic instant redemption function this month; in the process of sending TUSD to the redemption address, users can immediately receive the remittance that TrueUSD automatically refunds to the registered bank account. However, this service is temporarily only open to registered users with a redemption amount greater than 1,000 US dollars (the previous minimum standard was 10,000 US dollars).
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There are more or less credit problems
However, regarding the issue of redeeming stablecoins, in addition to the lack of fiat currency exchange channels mentioned above, there is another event worthy of attention recently-Gemini accidentally closed the OTC trading account trying to redeem the stablecoin GUSD. Although the incident was left silent in the silence of both parties, it just confirmed the community’s doubts about PAX and GUSD, two stablecoins regulated by the US government, last year.
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The above is the specific code of setLawEnforcementRole. Slashed comments confirming what these features were designed to do (Image source: TheNextWeb)
Moreover, the transparency of capital reserves cannot prove that there is no possibility of black-box operations. From the revelations of anonymous over-the-counter traders at the beginning of the year, it can be known that Gemin and Paxos exchanges privately provided benefits to some traders around December last year to encourage them to choose own stablecoin. Coincidentally, the prices of PAX and GUSD fluctuated sharply in mid-December, and the market value of GUSD soared nearly 20 percent from $87 million to $103 million on December 17. Therefore, for fiat currency-collateralized stablecoins, even if they remain transparent, it does not mean that they are credible. In essence, this kind of centralized management and operating currency has more or less the possibility of market manipulation, but the method of use and The parts that appear are different.
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GUSD price and market value changes over time (picture from: Coinmarketcap)
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The price is unstable, and long-term unanchoring is a common phenomenon
Of course, this is not to blame for BitCNY. Compared with preempting traffic, price stability is more important for stablecoins; without the support of trusted legal assets, digital asset-backed currencies can only guarantee stablecoins through a sound operating mechanism. Anchoring with fiat currency prices. Of course, this is also a problem that DAI, which is currently developing rapidly, is worrying about.
However, the price is unstable, and long-term anchoring is a common phenomenon in the stablecoin market; not only digital asset-backed stablecoins, but also stablecoins based on legal tender cannot guarantee that they will always be anchored.
Data source: Coinmarketcap
If black swan events such as the October price flash crash and bankruptcy crisis are excluded, USDT can be said to be the stable currency with the lowest volatility and the price closest to the US dollar. The characteristics of its opaque information have improved the liquidity of USDT to a certain extent, thereby suppressing the market premium phenomenon; while TUSD, GUSD, PAX, USDC and other stable currencies with relatively transparent information are limited by market liquidity and lack of market liquidity. Influenced by factors such as market policies and other factors, it is impossible to respond and adjust to market conditions in a timely manner under special circumstances, so there is a common phenomenon of premium.
Data source: Coinmarketcap
Supplementary egg: After Binance announced the listing information of TUSD in mid-May 2018, the price of TUSD continued to skyrocket, and the increase even outperformed most of the better-performing altcoins. In order to guarantee its stablecoin, Binance decided to delay the listing time of TUSD.
In addition, it is worth mentioning the algorithmic bank-type digital currency that does not require any collateral. Theoretically speaking, this kind of reserve bank-like stablecoin whose circulation rights are controlled by algorithms can make its own value as close as possible to the value of the linked assets. However, Nubits, the first stablecoin in this category, has been seriously de-pegged from the U.S. dollar since March 2018, and the current price has continued to plummet below $0.06; and the subsequent related currencies are still in the development stage, which has attracted much attention. The star project Basis had to be shut down indefinitely due to regulatory issues.
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References:
The market looks lively, but it is actually a false prosperity
Taking the third quarter of 2017 as a turning point, USDT quickly seized the market with its first-mover advantage under the background that investors in some regions lacked legal currency trading channels, and played an increasingly important role in various cryptocurrency investments. Recently, with the continuous fermentation of this big brother’s black material, other stablecoins have caught up, and the market value and transaction volume have grown rapidly at a speed visible to the naked eye. Under the gloom of the bear market, the size of the stablecoin market is still expanding steadily. In the first quarter of 2019 alone, more than a dozen teams, including large institutions and industry giants, announced plans to launch new stablecoins.
[2] David Canellis，《PAX stablecoin has backdoor for freezing and seizing cryptocurrency》，TheNextWeb·
