Here is our pick of the 3 most important Stablecoin news stories during the week.
Stablecoins are here to stay!
Stablecoins are now the backbone of the Crypto ecosystem with the current Tether market cap: $83 billion. In early 2017 when it was $15 million, people laughed, then at $100million, $1billion & $10billion. Now it’s $80 billion with $70+ billion 24h volume. That is a killer stat, not only are stablecoins popular but they get heavily used every single day!
However, some of the ideas being tried are really quite weird. Take the idea of algorithmic stablecoins, the largest of which is Terra (UST). According to CoinGecko, the market value of Terra’s stablecoin UST reached $17.5 billion on April 18, surpassing BUSD’s $17.4 billion, becoming the third-largest stablecoin after USDT and USDC. But UST’s trading volume is very low, only 1/5 of BUSD.
https://www.bloomberg.com/opinion/articles/2022-04-19/the-stability-of-algorithmic-stablecoins
In the meantime, Central banks want to stay in the money business by issuing digital currencies. But they face a paradox of having to also protect the existing Fiat system and so have hit on the idea of designing a digital currency that works—but not too well.
In a report to the European Parliament Mr Brunnermeier and Jean-Pierre Landau of Sciences Po in Paris suggest that a central bank “will have to ensure that the cbdc is present everywhere but important nowhere”.
The average amount in an e- cny wallet is three yuan (47 cents), which does not suggest it has been a runaway success. In Britain, a House of Lords committee concluded that cbdcs were a “solution in search of a problem”.
How central banks are moving into e-money | The Economist
Then we have this new entrant offering yield or interest on their stablecoin.
USDB stablecoin offers as high as 100% LP yields on Fantom Network (cointelegraph.com)
So in summary, the existing Fiat establishment wants to build something that is not too attractive (no interest, small amounts and aggregate size only), while the Crypto world is trying to build something super attractive that has already achieved some 70+ Billion in daily trading volume.
___________________________________________________________________________________________________________
Alan Scott is an expert in the FX market and has been working in the domain of stablecoins for many years. Twitter @Alan_SmartMoney
We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information.
For context on stablecoins please read this introductory interview with Alan “How stablecoins will change our world” and read articles tagged stablecoin in our archives.
___________________________________________________________________________________________________________
New readers can read 3 free articles. To become a member with full access to all that Daily Fintech offers, the cost is just US$143 a year (= $0.39 per day or $2.75 per week). For less than one cup of coffee you get a week full of caffeine for the mind.
