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Stablecoins

Euro Stablecoin BOOMS: Bye, USD?The Euro Stablecoin Ascends: EURC Hits Record High as Traders Eye Dollar Alternatives Amid Global Uncertainty For years, the digital asset landscape has been dominated by the US dollar, not just in trading volume but fundamentally through the ubiquity of USD-pegged stablecoins. Tokens like Tether (USDT) and Circle's own USD Coin (USDC) have become the bedrock of the crypto economy, acting as crucial bridges between volatile cryptocurrencies and traditional fiat, facilitating trading, lending, and yield generation within decentralized finance (DeFi). However, the winds of change may be subtly shifting. Amidst a backdrop of persistent global trade tensions, geopolitical maneuvering, and questions surrounding the long-term trajectory of the US dollar, alternative fiat-backed stablecoins are gaining traction. Leading this nascent charge is the Euro Coin (EURC), Circle's Euro-backed offering, which recently surged to a record market capitalization exceeding $246 million. This milestone, while still dwarfed by its multi-billion dollar USD counterparts, is significant. It signals a growing appetite among traders, investors, and institutions for stable digital assets pegged to currencies other than the greenback. The rise of EURC isn't happening in a vacuum; it reflects a confluence of factors challenging the dollar's undisputed reign in the digital sphere and highlighting the strategic appeal of diversification. Understanding the Stablecoin Status Quo and the Dollar's Dominance Stablecoins are indispensable cogs in the crypto machine. They offer price stability relative to a specific asset (usually a major fiat currency), allowing market participants to park funds, calculate profits, pay for services, and interact with DeFi protocols without the wild price swings characteristic of Bitcoin or Ethereum. USDT and USDC have achieved massive network effects, integrated across countless exchanges, wallets, and DeFi applications, making them the default choice for liquidity and settlement. Their success, however, inherently ties a vast swathe of the digital economy to the US dollar's fate and US monetary policy. For international users, particularly those operating primarily within the Eurozone or holding significant Euro-denominated assets or liabilities, relying solely on USD stablecoins introduces foreign exchange (FX) risk and potential conversion inefficiencies. Enter EURC: A Regulated Euro On-Chain Launched by Circle, the same regulated fintech firm behind the highly successful USDC, Euro Coin (EURC) aims to replicate the trust and utility of its dollar sibling, but pegged 1:1 to the Euro. Each EURC token is intended to be fully backed by Euros held in dedicated, segregated bank accounts under Circle's custody. This emphasis on transparency and regulatory compliance, mirroring the approach taken with USDC, is crucial for building trust, especially among institutional players wary of less transparent stablecoin issuers. The recent surge in EURC's supply to over €246 million (equivalent to ~$246 million at the time of the record, assuming near parity for simplicity, though the exact USD value fluctuates) indicates accelerating adoption. This growth isn't just passive accumulation; it suggests active minting driven by real demand. Why the Shift? Trade Uncertainty and the Allure of Diversification The primary catalyst cited for this growing interest in non-USD stablecoins is the pervasive sense of uncertainty clouding the global trade environment and the US dollar's outlook. Several factors contribute to this: 1. Geopolitical Tensions & Deglobalization Trends: Ongoing conflicts, shifting alliances, and a move towards regional trading blocs can create volatility and potentially weaken dominant currencies like the dollar as nations explore alternative payment and reserve systems. 2. US Economic Concerns: Debates around US national debt levels, inflation trajectory, and the Federal Reserve's monetary policy decisions can lead some international investors and traders to hedge against potential dollar depreciation. 3. Desire for FX Hedging: Businesses and traders operating significantly within the Eurozone may prefer a Euro-native stablecoin to minimize the costs and risks associated with constantly converting between EUR and USD stablecoins. Holding EURC directly aligns their digital cash position with their operational currency. 4. European Regulatory Clarity (MiCA): The implementation of the Markets in Crypto-Assets (MiCA) regulation in the European Union provides a clearer framework for stablecoin issuers and users within the bloc, potentially boosting confidence in well-regulated Euro stablecoins like EURC. 5. DeFi Diversification: As the DeFi ecosystem matures, users are seeking more diverse collateral types and trading pairs. EURC allows for the creation of Euro-based liquidity pools and lending markets, catering to a specific user base and reducing systemic reliance on USD assets. Traders aren't necessarily predicting an imminent dollar collapse, but rather strategically positioning themselves to mitigate risk. Holding a portion of their stable digital assets in EURC provides a hedge – if the dollar weakens against the Euro, the value of their EURC holdings, when measured in dollars, would increase, offsetting potential losses on USD-denominated assets. Use Cases and Potential Beyond Hedging While hedging FX risk is a significant driver, the utility of EURC extends further: • Seamless Euro Transactions: Facilitates frictionless payments and settlements within the Eurozone using blockchain technology. • European DeFi Growth: Enables the development of DeFi applications tailored to the European market, offering Euro-based borrowing, lending, and yield opportunities. • Remittances: Potentially offers a more efficient channel for cross-border Euro transfers compared to traditional banking rails. • Trading Pairs: Allows exchanges to offer direct EURC trading pairs against various cryptocurrencies, simplifying the process for Euro-based traders. Challenges and the Road Ahead Despite its record supply, EURC faces hurdles. Its market capitalization and liquidity remain a fraction of USDT's and USDC's. This lower liquidity can mean higher slippage on large trades and limits its immediate utility as deep collateral in major DeFi protocols, which thrive on multi-billion dollar liquidity pools. Building the network effect – getting listed on more exchanges, integrated into more wallets, and accepted by more DeFi platforms – takes time and concerted effort. Furthermore, EURC's success is intrinsically linked to the stability and economic health of the Eurozone itself. It diversifies away from the dollar, but not away from fiat risk entirely. The regulatory landscape, while clarifying under MiCA, will continue to evolve and shape the operational environment. Conclusion: A Sign of a Maturing Market The surge in Circle's EURC supply to over $246 million is more than just a numerical milestone; it's a tangible indicator of a maturing stablecoin market seeking diversification beyond the US dollar. Driven by global trade uncertainties, geopolitical shifts, and a desire among European users and savvy traders to hedge FX risk, Euro-based stablecoins are carving out a growing niche. While the dollar-pegged giants still dominate, the ascent of well-regulated alternatives like EURC signifies a crucial step towards a potentially multi-polar stablecoin future. It underscores the demand for trusted, compliant digital representations of major world currencies, offering users greater choice and resilience in an increasingly complex global financial landscape. The journey for EURC and its Euro counterparts is still in its early stages, but the trend towards diversification is clear, promising a more varied and potentially more stable digital asset ecosystem ahead.
Long
by bryandowningqln
XRP’s Path to Dominance: A Forecasted Price Per TokenAs of March 30, 2025, XRP, the cryptocurrency powering the XRP Ledger (XRPL) and Ripple’s On-Demand Liquidity (ODL) solution, is poised for a potential surge in adoption and value. With the Ripple-SEC lawsuit dropped earlier this year, a wave of bullish developments is setting the stage for XRP to challenge traditional financial systems like SWIFT. But can XRP realistically capture 5% of SWIFT’s massive $5 trillion daily transaction volume, and what could this mean for its price? Let’s dive into the factors driving XRP’s growth, including institutional adoption, tokenization, ETFs, futures trading, private ledgers, investor sentiment, and emerging trends like Central Bank Digital Currencies (CBDCs) and FedNow transactions. The Dropped Ripple-SEC Lawsuit: A Game-Changer The Ripple-SEC lawsuit, which had cast a shadow over XRP since 2020, has been dismissed, removing a significant regulatory hurdle. This development has already sparked a rally, with XRP’s price climbing to around $2.50 from earlier lows, driven by renewed investor confidence. The lawsuit’s resolution clears the path for institutional adoption, particularly for ODL, which uses XRP as a bridge currency for cross-border payments, positioning it as a direct competitor to SWIFT. XRP’s 5% SWIFT Ambition: Institutional Adoption Soars SWIFT processes approximately $5 trillion in daily transactions, and capturing 5% of that—$250 billion/day—would be a monumental achievement for XRP. Recent developments suggest this goal is within reach. Japanese banks are going live on the XRPL in 2025, joining 75 major global banks adopting XRPL for cross-border payments and private ledgers. This adoption, fueled by XRPL’s low-cost, high-speed transactions and ISO 20022 compliance, could drive $150 billion/day in XRP transactions via ODL, with the remainder handled by stablecoins like RLUSD, RLGBP, RLEUR, and RLJPY. Private ledgers on XRPL, now utilized by these 75 banks, handle $50 billion/day in transactions, with XRP facilitating 30% ($15 billion/day) of settlements. This institutional embrace, combined with XRP’s energy-efficient consensus mechanism, positions it as a viable alternative to SWIFT’s traditional infrastructure. Tokenization Projects Boost XRPL’s Utility Tokenization is another key driver for XRP’s growth. Projects like Silver Scott, Aurum Equity Partners, and Zoniqx are tokenizing real-world assets—such as real estate, private equity, and debt funds—on the XRPL. These initiatives are projected to tokenize $500 billion in assets annually, with XRP used for 20% of settlement ($100 billion/year). By enabling efficient, decentralized asset management, tokenization enhances XRPL’s utility, indirectly boosting demand for XRP as the network’s native token. XRP ETFs, Futures Trading, and Investor Sentiment Later in 2025, the SEC is expected to approve 10+ XRP exchange-traded funds (ETFs), following the precedent set by Bitcoin and Ethereum. These ETFs will open XRP to institutional and retail investors, increasing liquidity and driving speculative demand. Additionally, XRP futures trading on platforms like Kraken will further amplify market activity, mirroring Bitcoin’s sentiment-driven rallies. With investor sentiment resembling Bitcoin’s—where global events and hype can propel prices—XRP could see a 3x–5x increase from its current $2.50, potentially reaching $7.50–$12.50 in the short term. Central Bank Digital Currencies (CBDCs) and FedNow The rise of CBDCs adds another layer to XRP’s potential. The European Union’s digital euro, alongside other global CBDC initiatives, could leverage XRPL’s infrastructure for cross-border settlements. Ripple is already in discussions with over 20 central banks about CBDCs, as noted in web reports, and XRPL’s ability to handle multi-currency transactions positions it as a natural fit. If the EU’s digital euro integrates with XRPL, XRP could process an additional $50 billion/day in CBDC-related transactions, further boosting its utility. Similarly, the U.S. Federal Reserve’s FedNow Service, launched for instant payments, could intersect with XRPL if institutions adopt ODL for cross-border FedNow transactions. While FedNow focuses on domestic U.S. payments, its integration with XRPL for international settlements could drive another $25 billion/day in XRP transactions, enhancing its role in the global financial ecosystem. Private Ledgers: Tailored Solutions for Institutions XRPL’s support for private ledgers allows banks to customize solutions for privacy and efficiency. With 75 banks now using private ledgers, handling $50 billion/day with 30% ($15 billion/day) settled in XRP, this feature strengthens XRP’s appeal for institutional use, complementing public ledger transactions and CBDC integrations. Forecasting XRP’s Price: A Realistic Outlook Given these developments, what’s a realistic price forecast for XRP if it captures 5% of SWIFT’s volume ($250 billion/day), plus additional volume from CBDCs, FedNow, tokenization, ETFs, futures, and private ledgers? Let’s model it conservatively: Daily Transaction Value: $150 billion (ODL) + $15 billion (private ledgers) + $50 billion (CBDCs) + $25 billion (FedNow) = $240 billion/day. Annual Value: $240 billion * 365 = $87.6 trillion/year. Tokenization Contribution: $100 billion/year. Total Annual Value: $87.7 trillion/year. Market Cap Multiplier: In a conservative scenario, a 1x–2x multiplier reflects cautious adoption, competition, and XRP’s 55.5 billion supply: At 1x: Market cap = $87.7 trillion, price = ~$1,580. At 2x: Market cap = $175.4 trillion, price = ~$3,161. Adjusted for Realism: A $175.4 trillion market cap exceeds global GDP and crypto market projections. Adjusting to 0.5x (conservative, reflecting competition and supply limits): $43.85 trillion, price = ~$790. Thus, a realistic conservative forecast for XRP, factoring in all these developments, is approximately $790 per token in over the next year or two. This price reflects XRP’s growing utility, institutional adoption, and sentiment-driven growth, but it’s tempered by supply constraints, competition from SWIFT, other blockchains, and stablecoins, and the need for broader regulatory clarity outside the U.S. Conclusion XRP’s potential to capture 5% of SWIFT’s volume, combined with Japanese banks on XRPL, tokenization projects, ETF and futures approvals, private ledgers, CBDCs like the EU’s digital euro, and FedNow integrations, positions it for significant growth. However, a conservative forecast of $790 per token in the medium term is more aligned with current market dynamics and XRP’s fundamentals. While XRP’s journey is exciting, its price trajectory will depend on sustained adoption, regulatory progress, and competition in the evolving crypto landscape. Stay tuned as XRP continues to reshape global finance!
KRAKEN:XRPUSDLong
by MissouriTim
3
USDC Leads Stablecoin Market Cap Growth in 2024, Surpassing USDT The year 2024 witnessed a significant shift in the stablecoin landscape, with Circle's USD Coin (USDC) demonstrating a remarkable resurgence and outperforming its main competitor, Tether's USDT, in terms of market capitalization growth. This surge marks a significant milestone for USDC, which had faced a considerable setback in 2023 following the collapse of Silicon Valley Bank (SVB). This article delves into the factors contributing to USDC's impressive recovery and its implications for the broader stablecoin market. USDC's Rocky Road to Recovery USDC's journey in recent years has been a rollercoaster ride. In 2023, the stablecoin experienced a substantial downturn, with its market cap plummeting by 45%. This decline was largely attributed to the collapse of SVB, where Circle had a portion of its reserves held. The bank's failure triggered a crisis of confidence in USDC, leading to significant withdrawals and a temporary de-pegging from the US dollar. This event cast a shadow over USDC's future and raised concerns about the stability of stablecoins in general. However, USDC's performance in 2024 tells a different story. The stablecoin not only recovered from the SVB-induced slump but also surpassed USDT in market cap growth. This remarkable turnaround underscores USDC's resilience and the growing trust in its underlying mechanisms. Factors Driving USDC's Growth Several factors have contributed to USDC's impressive growth in 2024: 1. Increased Regulatory Clarity: The evolving regulatory landscape surrounding stablecoins has been crucial in USDC's resurgence. As governments worldwide are increasingly focusing on establishing clear frameworks for stablecoin operations, USDC's commitment to transparency and compliance has resonated with investors and users. This regulatory clarity has fostered a more favorable environment for USDC, attracting both institutional and retail adoption. 2. Focus on Trust and Transparency: Circle has prioritized building trust and transparency in its operations. The company regularly publishes attestations of its reserves, providing assurance to users that USDC is fully backed by traditional assets. This commitment to transparency has been instrumental in restoring confidence in USDC following the SVB crisis. 3. Expansion of Blockchain Infrastructure: The continuous development and expansion of blockchain infrastructure have also contributed to USDC's growth. As more blockchain networks integrate USDC, its utility and accessibility increase, driving adoption and market capitalization. 4. Growing Institutional Adoption: USDC has witnessed increasing adoption among institutional investors. These investors are drawn to USDC's stability, transparency, and regulatory compliance, making it a preferred choice for various use cases, including trading, lending, and payments. 5. Market Demand for Diversification: The stablecoin market has been increasingly seeking diversification beyond USDT. Concerns about the composition of Tether's reserves and its lack of transparency have led investors to explore alternative stablecoins. USDC, with its focus on transparency and regulatory compliance, has emerged as a leading beneficiary of this trend. USDC vs. USDT: A Closer Look USDC and USDT are the two dominant stablecoins in the market, but they differ significantly in their approach and underlying mechanisms. • Transparency and Audits: USDC has been lauded for its transparency, with regular audits and attestations of its reserves. In contrast, Tether has faced criticism for its lack of transparency and the composition of its reserves. • Regulatory Compliance: Circle has actively engaged with regulators and prioritized compliance, while Tether has faced regulatory scrutiny in various jurisdictions. • Market Capitalization: While USDT still holds the largest market share, USDC has been steadily closing the gap, driven by its strong growth in 2024. Implications for the Stablecoin Market USDC's surge has significant implications for the broader stablecoin market: • Increased Competition: USDC's growth has intensified competition in the stablecoin market, challenging USDT's dominance. This competition is healthy for the market, driving innovation and improving standards. • Focus on Transparency and Compliance: USDC's success has reinforced the importance of transparency and regulatory compliance in the stablecoin industry. This trend is likely to continue, with stablecoin issuers prioritizing these aspects to gain trust and adoption. • Growing Institutional Interest: The increasing institutional adoption of USDC signals a growing acceptance of stablecoins as a legitimate asset class. This trend is likely to attract more institutional investors to the stablecoin market, further driving its growth. Conclusion Circle's USDC has demonstrated a remarkable recovery and growth in 2024, outperforming Tether's USDT in market cap surge. This resurgence can be attributed to several factors, including increased regulatory clarity, a focus on trust and transparency, expansion of blockchain infrastructure, growing institutional adoption, and market demand for diversification. USDC's success has significant implications for the stablecoin market, intensifying competition, emphasizing transparency and compliance, and attracting growing institutional interest. As the stablecoin market continues to evolve, USDC is poised to play a leading role, shaping its future and driving its adoption in the broader financial ecosystem.
CRYPTOCAP:USDCLong
by bryandowningqln
CRACKS ARE FORMING IN USDT DOMINANCE! THE END IS NEAR!USDT has completely dominated the stablecoin market for a long time now, but cracks are beginning to form in its foundation that could cause the whole structure to come crashing down. People are losing trust in USDT, even though the vast majority of trading platforms use it as the sole medium of exchange on their platforms. Competitors are turning up the heat in this market, and companies like Circle (USDC), which are fully audited, as well as newcomers like Ripple's RLUSD, could pose a serious challenge to USDT if it doesn't prove its reserves through regular audits and restore investor confidence. I personally believe that USDT is a Ponzi scheme, similar to the Federal Reserve, which continuously counterfeits dollars by minting excess tokens, with nothing but faith backing them. I also believe that the time of USDT's dominance is coming to a swift end. Once RLUSD is released and available for purchase to Wall Street and Main Street, I believe that the majority of stablecoin holders will switch from USDT to RLUSD, as Ripple is one of the most transparent and reputable companies within the crypto space. I am one of these people. Good luck, and don't put all your eggs in one basket!
CRYPTOCAP:USDT.D
by MetaShackle
TETHER (USDT) COLLAPSE IS IMMINENT! With the United States about to pass strict regulation regarding stablecoins, which includes a measure to insure "Robust transparency, audit and reporting requirements," Tether is absolutely doomed, as they have consistently refused to confirm a 1:1 peg to the USD through an independent, third-party audit, which in my book, is because they're not doing it. Something is fishy with Tether, and I would not be surprised if it has not maintained the 1:1 peg as it has claimed, but will soon be exposed as a fraud, and a ponzi scheme designed to benefit its owners at the expense of the general public. On April 9th, Senator Kirsten Gillibrand (D-N.Y.) announced that: "This legislation develops two paths for stablecoin issuers. 1- The first path would be for depository institutions that would allow for both federal and state bank charter depository institutions to become stablecoin issuers after an approval process. 2- The other path would be for nondepository institutions that would give the federal government supervisory authority over the state nonbank institutions while preserving states as the primary functional regulator." This spells the end for Tether, and certain doom for any company whose business model relies upon it, such as: Exchanges, OTC desks, Trading Platforms and Wallets, Remittance Services and DEFI Platforms. You were warned! Don't get caught holding the bag!
COINBASE:USDTUSDShort
by MetaShackle
2
Crypto Regulations: How MiCA Will Affect EU TradersIn the rapidly evolving world of cryptocurrency, the European Union has taken a significant and important step forward with the introduction of the Markets in Crypto-Assets Regulation (MiCA). This groundbreaking regulatory framework marks a pivotal moment for the crypto market within the EU, promising to bring much-needed clarity and stability to an industry that has long been likened to the Wild West due to its volatility and lack of standardization. The European Union is a leader in creating legislation for emerging technologies. This became clear with the introduction of GDPR, which protects internet users’ personal data, the AI Act that aims to protect citizens of the EU from malpractice, such as cognitive manipulation of people and social scoring, and now - MiCA. Paving the way forward for others, the EU is evolving its digital legislation frameworks faster than other unions or countries. This article delves into how MiCA will reshape the landscape for EU traders, impacting everything - from the way they interact with crypto assets to the broader market dynamics they navigate daily. Why do we need regulations like MiCA? If there are no regulations, markets can run wild and experience giant increases, however when the fun is over and people lose money to fraud and even large-scale bankruptcy of exchanges - investors, especially institutional ones, will not dare place their money in crypto projects and companies. And since for investors, money is trust - the cryptocurrency market is doomed without proper regulation. On the flip side, extremely stringent and disorganized legislation can lead to the same outcome. Countries struggle with the abstract nature of cryptocurrencies, and many have expressed an outright desire to ban them, seeing as it is the easier option. That is why MiCA is a well-devised framework for others to follow - It is focused and comprehensive. Some may argue that cryptocurrencies are meant to be decentralized, unregulated and follow a laissez-faire approach. While this is possible, more so for some cryptocurrencies than others, there can be no growth in these markets as new projects need to have banking and investors behind them to realize their blockchain-based ideas. It is also unrealistic to think that such a clandestine financial system will never cross paths with the regular banking system. What exactly is MiCA? The inception of the Markets in Crypto-Assets Regulation (MiCA) is rooted in the European Union's recognition of the growing significance of cryptocurrencies and the associated risks in an unregulated environment. The primary catalyst for MiCA's development was the need for regulatory clarity in the burgeoning crypto market, which had been expanding rapidly without a standardized regulatory framework since the birth of Bitcoin in 2009. This lack of regulation posed risks such as fraud, market manipulation and financial instability. These concerns were heightened by incidents like the surge in initial coin offerings (ICOs), the capitulation of multiple large exchanges and the ironic instability of stable-coins. MiCA was proposed to provide a harmonized regulatory framework for crypto-assets that are not covered under existing EU financial legislation. The objective was to safeguard investors, maintain financial stability, and promote innovation within a secure and transparent environment. By introducing clear rules, MiCA aims to legitimize the crypto market, making it safer and more attractive for investors and consumers while mitigating the potential for financial crime and market manipulation. This move towards regulation reflects a global trend of governments and financial authorities worldwide striving to balance the benefits of innovation in the digital asset space with the need for consumer protection and market integrity. As such, MiCA represents a significant step by the EU in establishing a comprehensive regulatory regime for crypto-assets, setting a precedent that could influence global standards in cryptocurrency regulation. Key Points of MiCA MiCA introduces several key provisions that are set to transform the crypto-asset landscape in the European Union. The areas that are discussed and regulated the most are the areas where incidents have happened and people have lost their funds. It is important not to make the same mistakes as before. Exchanges & Brokerages One of the primary aspects of MiCA is the establishment of stringent authorization requirements for crypto-asset service providers. Under MiCA, any entity aiming to offer services related to crypto-assets, including trading, custody, or advisory services, must obtain authorization from one of the EU's national financial regulators. This process is designed to ensure that providers adhere to high standards of operational conduct, governance, and consumer protection outlined in the legislation. Crypto exchanges have gone bankrupt, been hacked or shut down abruptly in crypto’s short history. The aim of legislatures is to prevent these collapses or stop them in their tracks. Initial Public / Coin Offerings Another fundamental component of MiCA is the regulation of public offerings of crypto-assets. Companies intending to offer crypto-assets to the public are required to publish a detailed white paper. This document must provide clear, fair, and comprehensive information about the risks involved, ensuring that potential buyers are well-informed. The regulations aim to prevent misleading practices and enhance transparency in the market. Until now, many ICOs do publish white papers, however they can be purely fictional, written to trick the untrained eye into thinking the project is professionally done. Furthermore, this official process of submitting a white paper will ensure that the people behind the project are known. This will prevent people from faking their identities in order to anonymously scam their clients. Stablecoins MiCA also specifically addresses the regulation of stablecoins, which are categorized as either e-money tokens (EMTs) or asset-referenced tokens (ARTs). EMTs are stablecoins pegged to the value of a fiat currency, such as USDT, USDC and BUSD. ARTs are linked to other assets, such as WETH, WBTC. MiCA mandates that stablecoins must maintain adequate reserves and adhere to governance standards. Furthermore, there are stringent rules for stablecoins not pegged to EU currencies, including a cap on the number of transactions per day, aimed at preventing these assets from undermining the Euro. This approach to stablecoins is a response to concerns about their potential impact on financial stability and monetary policy. These concerns are justified, following the collapse of a few large market cap stable-coins during 2022. Through these provisions, MiCA aims to establish a secure and transparent environment for the trading and use of crypto-assets, ensuring that the rights of investors are protected while fostering innovation in the sector. Conclusion The introduction of MiCA by the European Union represents a watershed moment for the crypto-asset market. By establishing a harmonized regulatory framework, MiCA seeks to provide clarity, enhance market integrity, and protect investors, all while fostering an environment conducive to innovation. For EU traders, these regulations offer a more secure and transparent trading landscape, albeit with increased compliance obligations. The provisions on stablecoins, in particular, demonstrate a nuanced approach to different types of crypto-assets. As MiCA comes into full effect, its influence is expected to extend beyond the EU, potentially setting a precedent for global crypto-asset regulation. For traders and investors, staying informed and adapting to these regulatory changes will be key to navigating the evolving crypto market landscape.
Education
by sofex
USDT.DTeather dominance is used as gauge to inverse the prices of CRYPTOCAP:BTC & #altcoins. When CRYPTOCAP:USDT.D drops it is bullish for the entire crypto space and when it pumps it is bearish. Right now the downtrend is breaking below a channel that I have marked off since 2018. That means this channel has been in play 6 years. Right now the candles are breaking below the bottom TL in what I have labeled a 5 wave bearish declining sequence. The significance of this is move is important. The bottom TL has been the top of all bull markets since 2018 and we are currently breaking below that level with no real support in sight until 4% then 2%. This means that the bears have officially lost. It's game over now. Bull market is here and it looks big since this channel has been bear market support since 2018. BigMike loves you all let the party begin.
CRYPTOCAP:USDT.D
by Big_Mike716
4
Could TRON #TRX 6X v #BITCOIN TRXBTC has very good market structure (higher high's , higher lows's) for the past 3 years. Overlooked , & under-appreciated it seems like, in my view on it's sentiment on Justin's success of network adoption. We can see a clear Inverse head and shoulders with a very key neckline level that if broken with strength could a indicate a run at the LOG target. A disappointing TRX may only reach the linear target and not much beyond. My TRXUSD chart which I am watching also does point to a stellar Bull market for TRX
Long
by BallaJi
🔥 Stablecoins Breaking Out: This Time Is Different! 🚨If you've followed my analyses for a while, you've seen this chart before. This is a chart of the relative total stablecoins marketcap. In other words, the stablecoins marketcap divided by the total crypto marketcap. In my previous analyses, I stated that BTC dumped every time that the bottom support of the channel has been hit, with my most recent analysis talking about an impending dump after we hit it again in July. This was also the main reason why I was bearish during August and September. However, this time is different! For the first time since 2019, the relative stable coins marketcap has fallen through the bottom support of the channel. This is great news for crypto, since a rising value often means more bearish market conditions. With stablecoins falling, this could very well be the start of a longer-term downtrend, which is great for crypto as a whole because stables are being spent instead of being held.
CRYPTOCAP:USDTShort
by FieryTrading
9
Crypto long cycle indicatorI cannot take credit for this. I believe I saw this basic layout posted on Twitter by Will Clemente some time ago. I just re-created it myself so I could have the ability to watch in real time the larger crypto market cycles with this indicator. It is the market cap of stable coins USDC and USDT added together in parentheses (USDC+USDT) divided by total crypto market cap on trading view. It ends up looking like (USDC+USDT)/TOTAL as the ticker. You then use the logarithmic scale and draw parallel lines to hit the approximate market tops and bottoms. Well, with today's pump to above FWB:31K for BTC, it appears we're just about hitting the bottom line that indicates we're near a market top again for the crypto space for now. We're in that weird, in-between halvings timeframe, post the year-long market sell-off. I had been making the comparison to 2019's market for some time, and we just may well have seen the top of the crypto space for the year, or are very near to seeing it. I expect a slow grind down from here to the end of the year, it might start to try to rally again just before the halving, it tried to in 2020, but then the whole COVID situation caused a flash crash across all assets. If we don't have a similar catastrophe pre-halving, maybe the rally momentum early next year after a slow grind down for the remainder of this year simply follows through. Then we get the real mania bull cycle ala 2020-2021 all over again for 2024-2025. That's at least how I see this playing out. If you were smart enough to buy Bitcoin during the December lows, I'd start thinking about taking profits here and wait for it to find another decent supported low late this year/early next year if we are indeed sort-of repeating what happened in 2019.
CRYPTOCAP:USDC
by dieseldub
18
BTC-USD: MY HYPOTHESIS WHY WE ARE VERY NEAR BOTTOM!We are vey near the bottom if looking at RSI and VWAP. This pump will be only near 32,000 per BITCOIN and lets not expect more before we heavy crash to 14,000 Levels or below than 10,000 per BITCOIN. Reason is, last year to fck up by the current administration of BIDEN. Plus pre-halving retrace pump before we really enter the HALVING by 2024. FEEL FREE TO ZOOM OUT. By the way I am talking to myself. Just want to find ways to record this and not change my own hypothesis and follow this.
INDEX:BTCUSDLong
by osodatsismoso
12
🔥 Stablecoins Predicting Bitcoin DUMP🚨 100% Accurate Signal!If you enjoy this analysis, please give it a like and a follow. In this analysis We're going to take a look at the stablecoin marketcap, USDT and USDC to be precise. As seen on the chart, the stablecoin marketcap is trading in a well-defined bullish channel. Consequently, every single time that this metric has touched the bottom support, Bitcoin dumped. I'm aware that there's only a couple years of history, but a 3/3 hit-rate is still impressive and deserves your attention. To further strengthen the bearish narrative, BTC's volatility is currently at historical lows and the stock markets are seeing terrible results after the US downgrade from AAA to AA+. Do you think a dump is imminent? Or are we going back up? Share your thoughts below🙏
CRYPTOCAP:USDTShort
by FieryTrading
47
Update to Crypto cycle indicatorA couple days ago, I published this idea . It's an idea taken from a setup Will Clemente published on Twitter last year as the crypto space was bottoming, more specifically, as Ethereum hit bottom. He was using total market cap of USDT + USDC divided by total crypto market cap. I've revised this to add the next two largest stable coins, DAI and BUSD, by marketcap. Log scale, draw parallel lines and see how it lines up with Bitcoin and Ethereum cycle highs. It now shows more effectively tops and bottoms intracycle, meaning the summer 2021 selloff now touches the top line, which it did not do previously. The pump prior to the COVID low that coincided with bitcoin halving also gets much closer to the top line, providing a solid indication of another trade opportunity for the following months. Now, what is interesting is when you plot Ethereum vs. this chart. You do start to notice some differences. Where Bitcoin tops in April 2021, Ethereum rocketed to wild new highs in May while BTC set a lower high, then the entire space sells off together. They both bottom the same time in the summer, then the next top in November also happens at virtually the same time. So, "alt coin season" seemed to only apply to the April-May '21 timeframe, where after that they moved much more in tandem. The bottom indicator in the 2022 selloff pinned the Ethereum bottom (it actually goes outside of the top parallel in this setup), but Bitcoin took longer to find bottom. But, unlike the original USDT+USDC/TOTAL chart, we still get a touch on the top line as Bitcoin does its first test below $16,000 in November. The ultimate bottom was only minimally lower in December, at which point the indicator had moved off the upper line, pointing to a bullish divergence despite the ultimate bottom price of the cycle. Right now, we just set the BTC high coming off the 2022 lows, but Ethereum did not retest its highs at the same time. It set a lower high, which I take as yet one more indication that this is not the most bullish upwards move for the crypto space, combine that with the indicator crossing over that bottom line indicating a market top again, this makes me feel like this is not the place to buy Bitcoin or Eth. I'll wait for the next large dip, likely towards the end of this year, before finding another spot to go long for the big bull run setting up for the post halving bull run, 2024-2025. Here is a chart of the indicator by itself without the double pane with BTC or ETH: The 'formula' can be copied and pasted as follows: (CRYPTOCAP:USDT+CRYPTOCAP:USDC+CRYPTOCAP:DAI+GLASSNODE:BUSD_MARKETCAP)/CRYPTOCAP:TOTAL Then draw a parallel hitting the approximate tops and bottoms, using the logarithmic scale, though I'm more than happy letting the kind of extreme Ethereum '22 bottom be anomalously outside of the top parallel here in order to keep other indications of market bottoms more obvious.
BITSTAMP:BTCUSD
by dieseldub
3
USDT/USD Hidden Bearish Divergence Deathcross SetupUSDT, the so-called stable coin, is now below the Bullish Control Zone on the RSI and is showing MACD Hidden Bearish Divergence on multiple Intraday Timeframes at this level after failing to take back the 55 and 89 EMAs. If this goes as any other chart normally would, I would expect it to go back down to the lows of the range, which in this case would take us down to around 94 cents, but I wouldn't be surprised if it went lower.
COINBASE:USDTUSDShort
by RizeSenpai
2
Algorithmic Stablecoins: Will They Ever Find Enough Support?Algorithmic stablecoins, as their name implies, are cryptocurrencies that use algorithms to maintain a stable value instead of being backed up by any sort of reserve asset as collateral. However, in reality, some algorithmic stablecoins have struggled to maintain a stable peg, while others have failed catastrophically. This article examines the major types of algorithmic stablecoins, their design, and shortcomings and then explores how algorithmic stablecoins may develop over time. In conclusion, we believe algorithmic stablecoins will become the most important type of stablecoins globally and serve as the major currencies for the future’s decentralized financial world. Their creation and transaction will happen on a global scale instead of being subject to the regulation of any jurisdiction. Stabilization Mechanisms and Challenges Algorithmic stablecoins have a mechanism like the shadow banking which provides the possibility for offshore money creation. Different from other types of stablecoins, algorithmic stablecoins maintain price stability not by relying on centralized entities but by using algorithms to regulate supply and demand. As a result, algorithmic stablecoins face various challenges, including illiquidity and black swan incidents. Rebasing: This mechanism adjusts the circulating supply in response to price fluctuation. When the price of a stablecoin is higher than the reference, the protocol will mint more tokens. When the price goes the other way, the protocol will burn or repurchase tokens. Ampleforth is an example of stablecoins using this scheme. Seigniorage: This mechanism supports a stablecoin’s value by issuing one or more other cryptocurrencies. When the price of a stablecoin is higher than the reference, the protocol will use seigniorage tokens as collaterals to generate more tokens. Conversely, the protocol will buy back or burn seigniorage tokens. Basis Cash is an example of this type of stablecoins. Besides these two schemes, some new projects are experimenting with other innovative ways to maintain the peg. Take Frax Finance for instance. It introduced a fractional reserve stablecoin, which is partially backed by collateral, i.e. USDC, and partially stabilized algorithmically. Algorithmic stablecoins have faced various challenges in recent years. The major ones are the following. Imbalanced supply and demand: When demand drops, the price of an algorithmic stablecoin tend to be lower than the reference, leading to the burning or repurchasing of a part of the circulating supply to regain balance. However, such a move may further dent market confidence or even trigger a vicious circle of selling. Terra is a bloody lesson. Governance risks: Algorithmic stablecoins are run by smart contracts and decisions are made by the consensus of the majority. Therefore, there may be governance risks such as code defects, hacker attacks, manipulation, or conflict of interests. Legal and regulatory challenges: As algorithmic stablecoins are not backed up by physical assets, they face more legal and regulatory uncertainties. There may be more countries and regions banning or limiting the use of algorithmic stablecoins in the future. Mainstream Models: Semi-decentralized and Overcollateralized There are many subgroups of algorithmic stablecoins based on their design. The collateralized lending model of MakerDAO is representative. The protocol allows users to issue DAI by locking up collateral assets such as ETH and adjusts the supply of the stablecoin according to market demand. Another representative mechanism is the liquidity pool model of Aave, which adjusts the price of a stablecoin in real time based on supply and demand and maintains price stability through arbitrage among multiple stablecoins. Below are three stablecoins representative of the mainstream models. GHO GHO is a multi-collateral stablecoin that pegs its value to the U.S. dollar. Users or borrowers can mint GHO using a diversified set of collateral on Aave. When borrowers borrow GHO, the protocol mint GHO tokens. When the loan is repaid, the previously issued GHO tokens will be destroyed, reducing their circulation. GHO can be used in payment, lending and borrowing, and other use cases. It can also generate yield as the tokens will participate in liquidity mining on Aave automatically. GHO uses the liquidity pool model of Aave V3 where Aave is the only liquidity pool provider and users can only acquire GHO through Aave V3 using the collateral available. Therefore, all the revenue generated from the GHO stablecoin will go to the Aave Treasury and finally be controlled by the Aave DAO. In the future, more liquidity pool providers may be allowed to make the stablecoin more decentralized. In summary, GHO is a decentralized multi-collateral yield-generating stablecoin. Its innovative features, especially interoperability with other services on Aave, give it certain competitive advantages. However, as the stability of GHO relies on the value and liquidity of its collateral, if the market fluctuates widely or meets liquidity crises, the stablecoin may depeg and liquidate. GHO’s risk management and degree of decentralization are areas worthy of attention. If more liquidity pool providers join the system, the allocation of risks and interests will be more complicated. Then, more matured decentralized governance mechanisms will be needed to ensure its long-term stability and sustainability. CrvUSD CrvUSD is an algorithmic stablecoin using a so-called lending-liquidating AMM algorithm or LLAMMA. The algorithm maintains price stability by converting between the collateral (for example, ETH) and the stablecoin (let’s call it USD). If the price of collateral is high — a user has deposits all in ETH, but as it goes lower, it converts to USD. Users may also use liquidity provider positions (LP tokens) as collateral. This is very different from traditional AMM designs where one has USD on top and ETH on the bottom instead. The LLAMMA is designed to provide a soft liquidation mechanism that turns collateral into liquidity provider positions, thus avoiding large asset dumps in a short time as in other models. In a nutshell, Curve’s stablecoin mechanism achieves price stability and liquidity by combining the liquidity of different chains and multiple strategies and leveraging composability with other DeFi projects. The stablecoin can also enable investors to generate returns by participating in transactions, borrowing and lending, and liquidity mining, thus motivating more users to participate in its ecosystem. FRAX FRAX is partially backed by collateral assets and partially supported by the native token of Frax Finance, FXS. The ratio of these two in the backing of Frax is called the Collateral Ratio (CR) The collateral, in this case, is USDC. The Frax Protocol adjusts CR in accordance with the market price of Frax. When the market price of FRAX goes under HKEX:1 , the Frax algorithm increases the CR, meaning that each FRAX is required to be backed by a higher percentage of hard collateral (USDC). This action increases market confidence that Frax can maintain its backing, causing the price to rise. In this way, the algorithm maintains the balance and ensures Frax does not break its peg. In Frax V2, a new mechanism called algorithmic market operations controller or AMO was introduced, which reinvests the excess collateral elsewhere to generate additional revenue to support the protocol’s long-term growth. Also, the Frax community has voted to give up on the two-token model and increase the target CR to 100%. This will make Frax more attractive for users looking for a long-term store of value. The target CR will be achieved through AMO instead of selling the FXS token. The AMO module enables programmable monetary policy as long as it does not change the FRAXT price off its peg or lower the collateral ratio. This means that AMO controllers can perform open market operations algorithmically, but they can not arbitrarily mint FRAX out of thin air and break the peg. This keeps FRAX’s base layer stability mechanism pure and untouched while creating maximum flexibility and opportunity, enabling FRAX to become one of the most powerful stablecoin protocols. However, the protocol still needs to rely on external stablecoins as its last defense. If external stablecoins go wrong or are frozen, like what recently happened to USDC in its recent de-pegging, the stability, and security of FRAX and its protocol will be affected. What’s more, the protocol also relies on the FXS tokens for its governance and incentivizing users. If FXS tokens suffer price declines or reduced demand, FRAX and its protocol will be influenced too. In a nutshell, the strengths of GHO and crvUSD are their stable market positions, multiple use cases, and investment value. FRAX is strong in technology, but it has never been through large-scale market turbulences and its use cases and investment value are waiting to be demonstrated. In the future, GHO and crvUSD may continue to deepen their moat by rolling out new products and extending to new use cases. Current Issues The above-mentioned stablecoins face the same risk. With the increased complexity of their protocols, they are subject to more diversified attacks which could jeopardize the whole ecosystem out of the blue. In recent years, we’ve already seen many bankruptcies because of loopholes in stablecoins. In addition, competition in the stablecoin space is getting more and more fierce. A few decentralized stablecoins have built a deep moat in terms of on-chain liquidity and cooperation with other protocols. By contrast, native stablecoins of a single protocol have struggled to get enough liquidity. The cost for them is huge. Currently, there are two major directions in the development of stablecoins: collateral-based and arithmetic. The former can be considered pseudo-arithmetic stablecoins. The two types both have their issues. Collateral-based stablecoins require a large amount of overcollateralized assets, while algorithmic stablecoins are often faced with illiquidity and unfair incentives. In comparison, the previously popular “liquidity mining” model has essentially placed protocol-controlled value over algorithmic stability. But in the last two years, it has been proven that such a design that prioritizes liquidity over collateral also has problems. For example, in times of market contraction, there may be insufficient liquidity, and holders and DAOs may be unfairly rewarded. This may lead to situations where whales manipulate the market, which is detrimental to the long-term stability of the ecosystem. Low acceptance as a store of value These stablecoins have struggled to be accepted by users. The main reason is that they are not as stable as their mainstream peers that are pegged to fiats such as the U.S. dollar. Algorithmic stablecoins are more often used as rewards rather than being regarded as a store of value. DAI, as a pioneer in this space, has accrued market shares. However, with the rise of fiat-pegged stablecoins like USDC, DAI’s position has been shaken. In addition, algorithmic stablecoins often have complicated and incomprehensible mechanisms which require holders’ involvement in maintaining their stability. This means increased costs and risks and somewhat reduced experience for users. Algorithmic stablecoins have yet to be widely adopted, their liquidity and market shares are relatively low. This has restrained their use in payments, lending, and cross-border transfers, which in turn affected their attractiveness as a store of value. In summary, for arthrotomic stablecoins to be more widely accepted, their stability issue will need to be addressed first to enable them to be deemed as better storage of value. Furthermore, more efforts need to be put into understanding users’ needs, such as providing higher yields, to attract more users. Increasing connection to real-world assets is also a promising way to enhance the liquidity and value of algorithmic stablecoins and improve their competitiveness. Reliance on diversified collaterals At present, algorithmic stablecoin protocols still need a diversified set of collaterals such as ETH and CRV to operate, and their scalability also relies on the growth of the value of the collaterals. Meanwhile, they face risks of low demand. Some protocols have already run out of their insurance funds due to risk incidents. We are doubtful about the legitimacy of having multiple collaterals. From a short-term view, support for a diversified set of collaterals will improve the network effects and bring more liquidity to a stablecoin, especially in a bull market. However, from a long-term view, it’s an irresponsible speculative move that endangers the stablecoin’s stability and safety. Obtaining liquidity from centralized exchanges to improve the feasibility of these protocols may be a possible solution. Take Frax for instance. Although it is algorithmic in its stability mechanism, when faced with strong redemption pressure, its degree of decentralization reduces, leaving holders with more risks. Algorithmic stablecoins should be undercollateralized in nature and they are naturally riskier. However, such a nature makes it difficult for them to be compliant, which in turn is a prerequisite for them to be competitive against centralized stablecoins such as USDC. Therefore, finding a better solution to their reliance on diversified collaterals and expanding to more use cases will be the key to their future potential. Exploring Decentralized Algorithmic Stablecoins BTC/ETH Collateralized Crypto-native Stablecoins LUSD: Liquity’s Crypto Native Stablecoin LUSD is a stablecoin issued by the decentralized lending protocol Liquity which allows users to pledge ETH to obtain loans with 0% interest. The algorithm of LUSD requires borrowers to maintain over-collateralization, or else their borrowings will be liquidated. LUSD can be redeemed at any time for HKEX:1 of ETH. LUSD also benefits from its strong soft peg mechanism which adjusts the supply and demand of LUSD in line with market expectations to maintain its value within $1.00-$1.10. LUSD provides interest-free borrowing on Ethereum that allows users to obtain an ETH-backed loan without any recurring costs, making borrowing highly capital efficient. Additionally, it has innovative features such as collateral pools, stabilizations pools, and a liquidation mechanism to ensure its safety and stability. Nevertheless, it faces competition from protocols providing similar services, such as MakerDAO and Compound. In the meantime, regulatory pressures from different countries and regions, such as the U.S. and the European Union, are also a concern. DLLR: Sovryn’s Sovereign Stablecoin The Sovryn Dollar (DLLR) is a BTC-backed stablecoin aggregating multiple exclusively BTC-backed “constituent” stablecoins. It aims to maintain a 1:1 peg with the value of USD and provide a great form of payment and a reliable store of value. By aggregating more BTC-backed stablecoins such as ZUSD and DOC which rely on a combination of algorithmic and incentive-based mechanisms to stabilize, DLLR is designed to be more stable and more resilient to market volatility and collateral risks than any of the individual stablecoins backing it. The supply of DLLR is determined by market demand. When the price of DLLR is higher or lower than HKEX:1 , there will be arbitrage opportunities to restore the balance. Sovryn is a decentralized finance (DeFi) protocol deployed on a Bitcoin sidechain called Rootstock. It supports leveraged trading, perpetual futures, lending, and other DeFi activities and adopts zero-knowledge-proof technologies to protect user privacy. It also has the security assurance of the Bitcoin blockchain. All services on Sovryn are priced in BTC and secured by the Bitcoin network. Sovryn runs on EVM-compatible smart contracts on Rootstock and is interoperable with the Bitcoin network, lightning network, Ethereum, and the Binance Smart Chain. Most of the features of Rootstock or RSK, are like Ethereum. The uniqueness of the RSK blockchain is that it has 2-way interoperability with the Bitcoin blockchain, and it has a merged mining mechanism that allows it to be mined simultaneously with the Bitcoin blockchain. All Sovryn’s ownable contracts are currently controlled by the Exchequer multisig, an anonymous group of key holders, except Staking and FeeSharingProxy which can be updated according to the votes of SOV stakers. Changes to all contracts and the project’s codebase can be voted on in Bitocracy DAO, with the right to vote given to stakers of SOV tokens. The potential of DLLR lies in its being a fully transparent, decentralized, and censorship-resistant stablecoin that is exclusively backed by BTC, free from the intervention and risks of any centralized third party. It increases the value and utility of BTC and facilitates the circulation and usage of BTC. DLLR is also a powerful lending tool for the Sovryn platform, enabling users to borrow DLLR against BTC collateral with 0% interest and generate high yields. Multiassets-backed Stablecoins sUSD: leveraging the tailwind of synthetic assets sUSD is a stablecoin issued by Synthetix. It tracks the price of the U.S. dollar and relies on a decentralized oracle network to obtain price feeds. sUSD is baked by crypto-native collateral, i.e., the SNX token issued by Synthetix. sUSD has multiple use cases in the Synthetix ecosystem including trading, lending, saving, and buying other synthetic assets or Synths such as synthetic stocks, commodities, and cryptocurrencies. The pegging mechanism of sUSD relies mainly on arbitrage and the balance of demand and supply. When the price of sUSD goes below HKEX:1 , arbitragers can buy sUSD at external exchanges using the U.S. dollar or other stablecoins and then use sUSD to buy Synths on the platform or stake sUSD to borrow SNX or ETH. When the price of sUSD goes above HKEX:1 , arbitragers can stake SNX or ETH to borrow sUSD on the Synthetix platform and sell sUSD into the U.S. dollar or other stablecoins on external exchanges. Such arbitrage operations will increase the demand or supply of sUSD accordingly, helping it to restore the peg to $1. Benefiting from Synthetix’s multichain strategy, the use cases of sUSD have been greatly expanded with the introduction of Atomic Swaps, Curve, and Perps v2. Furthermore, the capital efficiency issue of sUSD will likely be addressed in Synthetix v3 which will support multiple collaterals thus bringing down sUSD’s pledge ratio. In this multichain era, Synthetix has the potential to grow into a super application and sUSD may leverage the tailwind of synthetic assets to find more support from real-world assets. TiUSD: multi-asset reserves stablecoin TiUSD is an algorithmic stablecoin issued by the TiTi Protocol that pegs to the value of 1 U.S. dollar. It is decentralized, backed by multi-assets reserves, and has a use-to-earn mechanism to ensure its stability and scalability. As an elastic supply stablecoin, its supply will be automatically adjusted according to market demand and supply and price fluctuation. Its reserve pool consists of multiple crypto assets, such as ETH, BTC, and DAI, which enhances its reserve diversification and risk resilience. However, TiUSD faces competition and challenges from other algorithmic stablecoins, especially those with more complex or advanced algorithmic designs or governance models, such as MakerDAO, Ampleforth, etc. Additionally, TiUSD needs to ensure its reserve diversification and risk resilience to avoid the risk of reserve depletion or attacks. Omnichain Stablecoins USD0: Tapioca-based stablecoin LayerZero is an innovative cross-chain messaging infrastructure that allows for the secure transfer of tokens between different chains without the need for asset wrapping, intermediate chains, or liquidity pools. Big Bang, an omnichain money market based on Layerzero, allows users to mint an omnichain stablecoin called usd0. It has no borrowing ceiling but a debt ceiling. The collateral that the program accepts for minting usd0 is the native Gas token (or its staked derivative). These include ETH, MATIC, AVAX, wstETH, rETH, stMATIC, and sAVAX. The pegging mechanism of USD0 is based on an algorithm called Tapioca, which employs a dynamic debt ceiling and a variable borrowing fee to maintain a 1:1 ratio between USD0 and the U.S. dollar. Tapioca adjusts the debt ceiling and borrowing fee in response to market conditions and changes in the value of the collateral. When the price of USD0 is above HKEX:1 , Tapioca increases the debt ceiling and lowers the borrowing fee to encourage users to mint more USD0. When the price of USD0 is below HKEX:1 , Tapioca lowers the debt ceiling and raises the borrowing fee to encourage users to repay or buy more USD0. In theory, USD0 can be used on any chain. It does not require asset wrapping or intermediate chains, thereby reducing costs. It can also leverage LayerZero for seamless token transfer and trading and can be integrated with other LayerZero-based applications, such as Stargate. However, its risk comes from the security and compatibility of the LayerZero protocol itself and its underlying chain. IST: enabling cross-chain asset transfer Inter Protocol’s IST is a fully collateralized, cryptocurrency-backed stable token for use across the Cosmos ecosystem. It’s designed to maintain parity with the US dollar (USD) for broad accessibility and have minimum price fluctuations. IST can be minted through three methods: the Parity Stability Module, Vaults, and BLD Boost. Using the Parity Stability Module, you can mint IST by using specified stablecoins as collateral, such as DAI, USDT, USDC and etc. Vaults allow users to mint IST by locking crypto assets at different pledge ratios set by a DAO. And BLD Boost enables users to mint IST with BLD as collateral against future staking rewards. IST has stability mechanisms similar to DAI, which consist of liquidations, pledge ratios, debt ceilings, the Reserve Pool for emergent debt reduction, and BLD issuance for debt repayment. These mechanisms are controlled with fine-grained restrictions to create a dynamic stablecoin model that has never existed before. Inter Protocol is built on Agoric, which is a blockchain within the Cosmos ecosystem where smart contracts can be developed using JavaScript. The native token of the Algoric blockchain is $BLD. IST is not only a stablecoin but also the native fee token of the Agoric platform, which adds utility to the stablecoin and enhances the stability of its token economy. Known as the “Internet of Blockchains”, Cosmos achieves blockchain interconnectivity through the IBC protocol, allowing for asset transfer between different blockchains and improving the interoperability and scalability of blockchains. Within its ecosystem, many projects are eyeing stablecoins. Being a representative, Inter Protocol’s IST has the potential to provide a more stable and reliable medium of value exchange for the whole system. As interoperability increases within the Cosmos ecosystem, it will have a positive spillover effect on the Inter Protocol. With more and more protocols being built on the Cosmos SDK achieving interoperability through IBC, there will be more protocols that the Inter Protocol can interact with, resulting in increases in the overall liquidity and potential user base. It can be foreseen that applications on Cosmos will be used more actively and so will the stablecoin of Inter Protocol. Finding Support Protocols like Curve are leading a new paradigm shift in DeFi. Specifically, DeFi protocols are increasingly realizing the need to control the issuance, circulation, and borrowing of stablecoins. With Frax and Aave following suit, more and more protocols are joining the quest to find solutions to the stablecoin trilemma. Differentiation on the product level alone will not be enough. Compared with MakerDAO, Curve, and Aave have stronger brand awareness and team capability. Therefore, their stablecoins have a relatively brighter prospect. Currently, demand for algorithmic stablecoins mainly falls into three categories: as a store of value; as a medium of exchange in transactions, and as an alternative to fiat-backed stablecoins. Meanwhile, there exist a lot of issues and challenges when introducing real-world assets into algorithmic stablecoins, for instance, issues related to the scalability and risks of real-world assets. Also, many stablecoin projects pay too much attention to the stabilization mechanism and decentralization to overlook market fitness. This is exactly why many of them struggle. Through a comprehensive overview of the industry landscape, we believe the following are promising directions of development for algorithmic stablecoins. Crypto-native stablecoin protocols. BTC and ETH are generating great network effects and they form the cornerstones for trust in cryptocurrencies. Therefore, these stablecoin projects will have a more solid backing in terms of assets. But user experience, size of lock-in assets, and reliable consolidation mechanisms will be key differentiators. Stablecoins issued by super applications. In essence, these protocols bypass the need for a trust intermediary and issue stablecoins directly to their users. In this scenario, protocols like Curve, Aave, and Synthetix will become super pawnshops enabling their users to enjoy customized financial services that are much faster and more friction-free than the real world. Considering that their user base and innovativeness will determine how far they can go, we are more bullish on Synthetix. Omnichain deployed stablecoins. They have the potential to realize true decentralization, cross-chain interoperability, and transferability. By issuing, transferring, and trading stablecoins freely on any chain, they will be able to ensure sufficient liquidity. More importantly, an omnichain insurance mechanism will help mitigate liquidity crises when a run happens. Delta-neutral stablecoins. Delta-neutral stablecoins may become an important trend in the future, but they will need to be supported by futures protocols and a large futures market. Market fitness and risk control are also worth paying attention to. Is there a possibility that an algorithmic stablecoin protocol could encompass all the features? Unfortunately, we have yet to come across such a project. Algorithmic stablecoins need to have an efficient and reliable algorithmic design that can maintain price stability in various market conditions and prevent collapses in extreme scenarios. They also need a large and loyal user base to support their economic model and provide efficient demand and liquidity. What’s more, a robust and innovative ecosystem will also be needed to bring more use cases and added value to the stablecoin through integration with on-and-off-chain services. When a stablecoin meets all these requirements, then more importance should be placed on the healthiness of its value network and assets used instead of the diversification of collateral. The rise of algorithmic stablecoins has its reasons and background, but that doesn’t mean they will eventually replace centralized stablecoins, especially in large-scale applications. Therefore, finding a more efficient and scalable solution under the premise of safety should be the focus. Also, stablecoins that are backed by the U.S. dollar such as USDC are still dominating the market because their issuers provide users with more reliable safeguards with their financial strength and compliance capability. For users seeking to avoid centralized risks and legal and regulatory risks, algorithmic stablecoins are a valuable alternative. While admitting their constraints, we hope more innovative solutions can be explored to drive the development of the whole DeFi industry.
CRYPTO:FRAXUSD
by BingVentures
Digital Assets Outlook 2023Digital assets have had a strong early 2023 Digital asset prices, led by Bitcoin, have had a strong 2023 so far. Bitcoin is up by over 70% this year and Ether is up by over 50%1. Together, these two assets still account for over 63% of the total market cap of the digital assets space. While the US Federal Reserve (Fed) is still raising interest rates, the market seems to expect that the recent bank failures (Silvergate Bank, Signature Bank, Silicon Valley Bank, Credit Suisse) will lead to central bank easing. Lower interest rates would benefit long-maturity assets, such as digital assets. Moreover, several traders have been caught off-guard and short-sellers expecting more downside in digital assets have had to liquidate positions leading to higher prices. We believe we could be on the cusp of the fourth major bull market in crypto, although the exact timing is uncertain. Our belief is that the next bull market will be enabled by advancements in speed and scalability of the blockchain networks, more intuitive user interfaces, and innovations in blockchain wallets, as well as developments in digital identity, which will pave the way for Web3 applications. The critical determinant, of course, will be the user applications that will take the market by storm and we will keep monitoring potential candidates on a continuous basis. Despite dismal price action last year, digital assets are supported by a healthy and vibrant software developer community. The number of monthly active developers actually rose last year by 5%2, which is significant, and confirms our view that developers remain actively engaged in their respective blockchain ecosystems. Layer 2 networks finally coming into their own, promising to solve the scalability issue The main impediment of current Bitcoin and Ethereum networks has been their inability to handle a large volume of transactions. It is estimated that, without a layer 2 solution, Bitcoin can only handle approximately 7-10 transactions per second while Ethereum can only handle approximately 15-30 transactions per second. While it is on Ethereum’s road map to be able to ultimately handle 50,000-100,000 transactions per second, this is not a reality at the moment. As a contrast, Visa is said to handle at least 1,700 transactions per second although there are some estimates that Visa could handle up to 24,000 transactions per second and Visa itself is claiming this number to be as high as 65,000 transactions per second3. One way to solve the scalability issue of blockchains is to use a layer 2 network, which is built on top of a layer 1 blockchain. Layer 2 networks move transactions off-chain, roll them up and bundle multiple transactions into a single transaction, which can then be secured on the layer 1 blockchain benefiting from underlying blockchain’s security and robustness. This bundling enables faster throughput, faster settlement, and lower prices. For Bitcoin, the most well-known layer 2 solution is the Lightning Network, while for Ethereum there are several options available, including optimistic rollups, zero-knowledge rollups (ZK rollups) and sidechains. It is also worth mentioning that the Ethereum network is expected to go through so called ‘sharding’ later this year, which is expected to split the network into separate ‘shards’ thereby increasing the capacity of the network and reducing the transaction (gas) fees in the process. Digital USD tokens emerging as a major use case Stablecoins, digital tokens issued on public blockchains and pegged to an underlying asset, such as a currency or a physical asset, were initially used in trading and interexchange settlement but have become increasingly popular in payments and remittances. Because stablecoins are global and accessible to anyone, they offer an attractive way to cheaply and securely transmit money around the world 24/7 and settle transactions (almost) instantaneously. The world’s largest stablecoin, Tether’s USDT, is particularly popular in Asia, while in the West Circle’s USDC is widely used. Stablecoins are designed to offer stability while an asset like Bitcoin is more volatile. To give an idea of the magnitude of transaction volumes, last year, Visa settled HKEX:12 trillion worth of payments, mainly related to consumer spending, while stablecoins settled HKEX:8 trillion worth of on-chain transactions, higher than the $2.2 trillion settled by Mastercard or HKEX:1 trillion settled by American Express4. This year, it is possible that the combined amount of stablecoin transactions exceeds the payments settled by Visa. These stablecoin transaction volumes, of course, are not related to consumer spending but rather to payments, trading and decentralised finance, and do not take into account trading volumes on centralised exchanges. Competition for instant payments heating up The market for instant settlement of payments seems to be in flux at the moment. Crypto regulation in both Europe and the US are focusing on stablecoins and are expected to set stringent reserve requirements for stablecoin issuers and also forbid interest being paid to stablecoin holders. We view transparency requirements into reserve assets of stablecoin issuers important but also believe that attention should be paid into issuers’ risk management, cybersecurity, and blockchain code testing quality. In the US, the Federal Reserve is planning to launch an instant payment system called FedNow in July 2023. The network will not be based on blockchain but will be able to settle payments in seconds and can support transactions between consumers, merchants, and banks. Some believe that the closure of Silvergate’s SEN network and Signature Bank’s SigNet network in mid-March 2023, both offering instant settlement service where clients were able to move assets between fiat currencies and crypto exchanges at any time, could have had something to do with the launch of FedNow. Around the world, central bank digital currencies (CBDCs) are also being actively developed. They offer a digital form of a government-issued currency that is not pegged to any physical commodity and these digital currencies will continue to be based on the fractional reserve banking system. In Europe, the European Commission adopted a legislative proposal in late October 2022 that mandates all banks to offer instant euro payments to any individual with a bank account in the eurozone. At the moment, the EU banking sector, on average, lags behind other major international markets in instant payments, although single-country solutions have been adopted and variations between countries are large. In some European countries, instant payments cover 70% of banks but, in others, only 1% of payments are settled instantly. The European banking sector has stated that they need up to two years to make banks instant-payment ready5. Europe has its own version of an instant settlement network. BCB Group, regulated in the UK and Switzerland, offers BLINC network that links crypto companies to the banking system and enables business accounts to trade in fiat and digital assets 24/7. The company already offers fiat-to-crypto rails in sterling, euros, Swiss francs, and yen in Europe and plans to add USD fiat-to-crypto rails by early Q2 2023. BCB’s goal is to plug the gaps left by the SEN network. Unlike SEN, BLINC is multicurrency-based and is not tied to any single credit institution. It was designed as a payment institution to provide on-ramps to banks in Europe, the UK and Switzerland. The company emphasises that its funds are always 1:1 backed and are unleveraged and un-rehyphothecated6. Sources 1 Source: Coingecko.com 2 Source: Electric Capital, 2022 Developer Report 3 Source: Visa Fact Sheet, 2022 4 Source: CoinMetrics 5 Source: Euromoney 6 Source: BCB Group, Coindesk
CME:BTC1!
by aneekaguptaWTE
USDD Strablecoin DepeggingAs i warned you in the past article, TRX is about to collapse because of USDD: According to their website, USDD is secured by the over-collateralization of multiple mainstream digital assets (e.g. TRX , BTC , and USDT). The total value of collateralized assets is significantly higher than that of USDD in circulation with the collateral ratio set at 120%. This is the USDD collateral: TRX 10,929,535,279 BTC 14,040.6 = about $313Mil USDT 29,964,253 USDC 39,719,839 so besides TRX , the total amount of other collateral is $383Mil for a stablecoin that has a mk cap of $724Mil. Now let`s say TRX drops to the Covid level of $0.0072, which is not unrealistic in my opinion. Then the TRX collateral of 10,929,535,279 coin will be worth $78,692,654. Assuming that BTC won`t go lower, then still the liquid collateral of USDD will be around $462Mil for a mk cap now of $724Mil, which will result in a huge depegging od the "stablecoin". Looking forward to read your opinion about it.
Short
by TopgOptions