Last fall, a rash of stablecoins entered the market, all purporting to do the same thing.
Their timing couldn’t have been better. In the coming months, a number of scandals would rock Tether Limited, who issue the first stablecoin (USDT), and Bitfinex, who relied heavily on the stablecoin to get to their massive market position.
USD Coin (USDC)
In stablecoins, there are less factors to consider regarding their quality.
How often does the stablecoin leave its dollar peg? When this happens, it indicates that more people are looking to rid themselves of the token — without going through the issuers — than are looking to buy it.
Stablecoins can go the other direction as well.
They rarely go more than a penny or two, but in rare cases like BitUSD, things can get awry.
In the case of USDC, its dollar peg is frequently respected. It probably doesn’t hurt that Coinbase offers multiple extremely easy redemption options. As little as a few USDC can be redeemed through the Coinbase retail application, for example.
Despite all the drama surrounding Tether, and even a revelation that the token is not completely backed by dollar reserves, the godfather of stablecoins retains a multi-billion dollar warchest of a market valuation.
Tether, by far, has the most liquidity, the most pairs, and after a year of numerous upstarts trying to unseat, maintains its huge standing, which is in excess of all others combined.
Tether is currently issued on three blockchains.
That being said, stablecoins are a long game. Eventually, a conglomerate of other stablecoins will likely rival the dominance of USDT, although that probably won’t happen in the near-term.
If there is a David in this fight, it’s TUSD, who are definitely the most competitive.
The company offers thing like automated auditing of their reserves and has recently expanded into other stablecoin offerings for fiat currencies besides the US dollar.
Firms like TrustToken, who issue TUSD, put their focus on transparency and providing a superior user experience.
In many respects, companies like Tether Limited are quite vulnerable to such disruption.
Time will tell whether the more recent entries will make a dent in Tether’s hegemony.
One thing that’s certainly true: there’s plenty of room for all in the nascent crypto economy.