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20 September 2021

Stablecoins: What Are They Good For? - Decrypt

Stablecoins: What Are They Good For? - Decrypt

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But Tether is also one of the mostcontroversial projectsin all of crypto precisely because of lingering questions about how Tethers are backed and allegations about how they’re used to prop up the price of Bitcoin.

Tether (the company) has long claimed that Tethers (the stablecoin) can beredeemedfor US dollars.

“There is no stablecoin that comes close to Tether’s 24-hour trading volume, which attests to the trust Tether traders have instilled in it,” a Tether spokesperson tellsDecrypt. .

In May of this year, Tether released a breakdown of its reserves, which revealed thatless than 3% of Tethersare backed by cash, at last crystalizing the fact that Tether holds very little actual dollars on reserve.

Tether’s optics issues have opened the door for Circle, the company behind stablecoin USDC, to challenge the stablecoin status quo.

Boston-based Circle, one of the earliest companies in the crypto industry, co-created USD Coin (USDC) along with Coinbase, the largest U.S.-based cryptocurrency exchange. .

This means that the company would have to comply with a growing list of regulations, but if Circle pulls off the shift, it would be the biggest step yet in its effort to overcome Tether as the primary stablecoin provider in the crypto industry. .

So if Tether and Circle—the two companies behind the two largest centralized stablecoins in the industry today—are embroiled in accounting and regulatory controversies, where does the stablecoin industry go from here? .

Paxos’s stablecoin (PAX), the “Pax Dollar” (formerly knownas the “Paxos Standard” coin) is an ERC20 token that Paxos claims is fully backed by U.S.

Paxos is also the company that provides the infrastructure for PayPal’s crypto venture.  .

Albeit not the first crypto firm to be granted the charter, this helped grant the company (and the stablecoin) alevel of legitimacythat it tries to use as a way of setting itself apart from competitors

Last year, crypto analytics firm Coin Metricspublished a reporton stablecoins and their links to illicit activity. 

Each NFT in the auctioncame with a starting bidof 10,000 BUSD—approximately $10,000—indicating that stablecoins can and have been used for specific marketplaces, as well as a means for mainstreaming the crypto industry as a whole. 

OneFIL has also taken aim at DeFi, with the ICHI team claiming that the stablecoin can also be used to “earn yield in DeFi.” 

Tether and Circle still dominate the stablecoin chatter in crypto—for now—but as other projects have demonstrated, stablecoins pop up wherever there is demand. 

In July of this year, Salvadoran news outletEl Faroreported that President Nayib Bukele’s government plans to incorporate a stablecoin to facilitate the world’s first attempt at recognizing Bitcoin as legal tender. 

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