New Stablecoins emerging in the Cryptocurrency market

Many stablecoins have been launched post the decline of Tether. Exchange stablecoins pegged to the dollar are relatively more popular than the others. Unlike non-exchange tied stablecoins, exchange- tied stablecoins enjoy certain benefits by being directly and immediately being put to use when launched. 

Some of the major stablecoins that have been introduced recently include:

Gemini

Crypto Exchange Gemini introduced their stablecoin Gemini Dollar and it was approved by New York Department of Financial Services (NYDFS) last month. Gemini, similar to Tether, claims that it will be pegged to the US Dollar. It asserts that an independent registered public accounting firm will verify the 1:1 peg on a monthly basis.

Paxos

Paxos Standard is a similar stablecoin that was issued by financial blockchain solution Paxos. It was also approved by NYDFS. Paxos was listed a couple weeks ago on top cryptocurrency exchange Binance.

TrueUSD

TrueUSD was introduced in October by one of the top three cryptocurrency exchanges OKEx.

HUSD

Huobi, a top ranked exchange by volume, launched its own stablecoin called HUSD. HBUS, the U.S. affiliate of the Singapore-based Huobi exchange, have seen both deposits and withdrawals of USDT “increased by over 10x over the last two days”.

It is to be seen which of these stablecoins go mainstream and leave the competitors behind. Success to the public will be the:

1) number of exchanges these coins get listed on,

2) the number of transactions and size of transactions committed,

3) ongoing verified amount of reserve.

Still more companies are thinking of jumping on the stablecoin bandwagon. IBM most recently announced its exploration into stablecoins through a collaboration with Stellar by building a stablecoin on the Stellar blockchain.

The world of Cryptocurrency – Stablecoins and the fall of Tether

Stablecoins are a relatively new phenomenon in the cryptocurrency arena which is gaining popularity.

So what exactly is a “Stablecoin”?

Stablecoins are digital currencies that are pegged to a stable asset like fiat currency, gold or even a collateral like cryptocurrency. It can also be backed by algorithm that governs the approach to expanding and contracting the money supply. The basic philosophy behind pegging them is to achieve store of value and use these stablecoins as a medium of exchange (two major functions of money).

There have been many stablecoins surfacing in the market. Tether was the leading stablecoin up till now but it is experiencing a decline.

Fall of Tether                                                            

          

Tether (USDT) promised to be 1:1 pegged to the US Dollar (having a dollar in reserve for every digital dollar issued) and provide the benefits of cryptocurrency while staying stable during price fluctuations. Most people bought USDT through Bitfinex because it gave them two advantages – buy bitcoins and transfer US dollars between countries. But Tether has fallen below $1 in the recent weeks. It is believed to be the largest stablecoin to date but now faces a decline due to scrutiny over suspicious accounting practices and false claims of having a one-to-one ratio of US dollars to back its digital currency.

The pro-USDT narrative has been that despite its failure to provide transparency into its reserves and failing to acquire a proper audit, USDT is still the most widely traded stablecoin with significantly more volume than other stablecoin competitors. But their narrative seems to be false as the market cap of USDT has gone down from $2.8 billion to $2 billion in two months.

Rumor has it that Tether is planning of exiting the stablecoin market due to increased scrutiny. However, other stablecoins are coming to the market. To read more about the upcoming stablecoins, wait for our next blog!