Stablecoins have become a common aspect of the cryptocurrency industry. While Tether remains the largest pegged currency, there are now four projects with a market capitalization of over $1 billion. An intriguing development, as it shows diversification, is crucial.
Three Stablecoins Are Breaking Out
For years, the primary trading market for Bitcoin, Ethereum, and other digital assets are stablecoins. A token pegged to the US Dollar can be a powerful tool when trading these volatile assets. It has proven a successful venture for Tether, as its USDT token has a market cap of just under $24 billion. Its trading volume sits above $102 billion, which is astonishing.
Other than Tether’s USDT, there is fierce competition among other stablecoins. one trend is apparent: the top assets are all tied to the US Dollar. The Euro, Pound Sterling, or other currencies are seemingly of less interest. Whether that situation will change remains unclear. Cryptocurrencies have always been denominated in US Dollars; thus, this current trend makes some sense.
Second on the list is USDC, a stablecoin initially overlooked by many. It has taken this project a long time to surpass the $1 billion market cap. Competing with Tether’s USDT and other similar offerings is no easy feat. Thanks to its listing on more exchanges – currently 174 platforms – it now has a value of over $4.7 billion.
As an Ethereum-only stablecoin, DAI has done very well for itself. It has seen a slow uptake in the beginning, yet the ongoing DeFi boom has proven beneficial. Thanks to 135 exchanges listing DAI, it can now cement its position among other stablecoins in this industry. The market cap of over $1.4 billion is impressive and may rise higher throughout 2021.
BUSD Claims The Fourth Spot
In a surprising turn of events, it appears a new entrant is rising the ranks quickly. BUSD, a US Dollar-pegged stablecoin issued by Binance, now has a market cap of over $1 billion. It trades on “just” 37 exchanges but proves more successful than stablecoins with far broader exchange support. An intriguing development, albeit Binance is the biggest crypto trading platform today.
No other stablecoin comes close to these market caps. PAX, the fifth-largest project, has a valuation below $500 million. It is a very competitive space, yet a lot of these assets may never see any adoption. One also has to wonder if this industry needs even more stablecoins, as there are several dozen of them already.
DeFi platforms have shown a tendency of minting their own algorithmic stablecoins as of late. A viable approach, but it isn’t necessarily important. There are 27 pegged currencies with a market cap of over $1 million already. If a new entrant wants to compete, it needs to offer something unique.