Interesting moves are afoot in stablecoin land.
Major crypto trading platform Binance, which is the top exchange by volume – doing nearly twice the 24-hour volume of its nearest competitor at time of writing – has announced that it is creating a new unified stablecoin market. While they haven’t released full details on this new market, we do know that USDT will be part of it, as it is the first token on the exchange to see a change related to it.
USDT will now be listed on Binance as USDⓈ – Binance deciding to use the Unicode symbol for an encircled S to denote a stablecoin. They write:
“Binance has renamed the USDT Market (USDT) to now be a combined Stablecoin Market (USDⓈ). This is to support more trading pairs with different stablecoins offered as a base pair. […] Please note that USDⓈ is not a new stablecoin: it is the symbol of Binance’s new stablecoin market.”
The mechanics of a stablecoin are simple enough: a steward holds funds in a bank account corresponding to tokens they sell to users. The trust issue is huge here, something that the trustless economy of Bitcoin is certainly weary of. But the advantages can’t be denied: no long deposit processes from exchanges to bank accounts. The ability to secure funds in a dollar-denominated currency when not trading them, essentially stabilizing them.
While there are several such stablecoins on the market as it stands, they as a group are probably not capable of capturing the entire market that will bloom. Thus, Binance is looking forward – they likely expect to see more stablecoins – particularly stablecoins from other fiat systems, primarily the Euro and a few Asian currencies. They understand that there will be more Stablecoins, and to give users the best experience, they’re acting now in order to have a working market ahead of time, so they can then just add tokens later.
The major stablecoins of the present are: Tether USD, Paxos Standard, and USD Coin. Another that will likely be in the pair belongs to the Ethereum world – the Maker DAO – and it’s quite different in functionality than are the simple paired tokens. Maker has a number of algorithmic functions within it, so much so that commentator Emin Gun Sirer has argued that it is a stablecoin while the others are merely “pegged”:
Featured image from Shutterstock.
Last modified: March 4, 2021 3:12 PM