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Stability.
The word seems to be completely at odds with the current nature of the cryptographic market. With its flagship currency that has "died" on hundreds of occasions, volatility and fluctuations in meteoric prices have come to define cryptocurrencies, as price stability, which is always elusive, is scarcely available.
Bitcoin's frantic value has given critics plenty of fodder to claim that its underlying use case, a digital currency for a digital era, is kaput. The same argument has led proponents to bitcoin rebranding as a store of value, a sort of digital gold, instead of its apparent usefulness as a payment method. It is also a primary concern for institutions when assessing the pros and cons of cryptocurrency adoption in their business models or investing in the youth activity class.
Enter stablecoins. A stablecoin, as the name suggests, is a cryptocurrency built to maintain a stable value. Typically, each currency is anchored one by one to a national currency, in particular the US dollar or the euro. By mediating between cryptographic cryptographic controls and volatility that alters their monetary functionality, stablecoins are the answer to those critics who cry out against the crypt mantra as digital money.
The need for a stable cryptocurrency is obvious. Your local coffee shop will not sell you that milk for crypts if the price could fall before they can liquidate it, and, on the other hand, you may not be willing to buy it in the crypt if there is the possibility that the payment will appreciate in value after the fact.
Because of the aforementioned possibilities, proponents claim that stablecoins are a necessary analogue for adoption. With a stable payment mechanism, the belief goes, traders, institutions and consumers should be more comfortable in using cryptocurrencies in their daily lives.
But apart form and function, the adoption still relies on the integration, dissemination and widespread use of a stablecoin to become a reliable payment method. Also, there are no two equal stablecoin, and different models have different degrees of decentralization and keep their pegs with collateral from different assets – or with anyone.
Stablecoins: a brief history
A bit of a product of the industry's first high-tech boom, the stablecoin model dates back to 2014.
Bitshares, born of an idea by Dan Larimer, introduced the first fully functional stablecoin into space. Described by many as a decentralized autonomous organization (DAO) offering a suite of services ranging from a decentralized exchange to smart payments managed by the contract, the platform debuted its stablecoin, BitUSD, on July 21, 2014.
Also known as SmartCoin, BitUSD is supported by the native currency of Bitshares, BTS. To maintain a 1: 1 dollar rung and protect against volatility, each BitUSD (typically) is insured with at least $ 2 in BTS. These BTSs are locked into an intelligent contract and BTS holders can use the Bitshares network to exchange their coins with BitUSD.
This model, known as crypto-collateralised, was the first fully functioning iteration of a price-stable cryptocurrency. By maintaining the bitcoin ethos, the support of this model raises it in the cryptographic economy, and its only links to the legal currency derive from the pegging of the dollar it represents.
Although it may seem strange to solve the volatility of an asset with the asset itself (more on this later when we analyze each type of stablecoin), BitUSD is still in circulation. But it has been overtaken by its competitors, the strongest of which supports what some say spits in the face of decentralization: stability with a direct stake to the USD.
Tether (USDT) launched shortly after BitUSD on October 3, 2014, as Realcoin. The most popular stablecoin needs no introduction (although we will cover it more extensively later). Currently in the 8th place on CoinMarketCap at the time of publication, the $ 2.8 billion asset allegedly supports each of its USDT tokens with one dollar in one of its multiple bank accounts. This fiat-collateralised custody model has become a market favorite, as Tether has become arbitrage and trading coverage on some of the most important exchanges in space.
As the first fully functional stablecoin, supported by fiat, Tether broke with the crypto-collateralized model that Bitshares pioneered, and his model would set a precedent for a series of successors in the coming years.
Fast forward to 2018 and stablecoins have become the taste of the year. The year after the boom and the stratospheric crisis of bitcoins and friends saw the stablecoin niche of the industry almost double its numbers. This expansion was accompanied by a capital infusion, as the asset class has attracted around $ 350 million in funding, most of which comes from crypt-specific venture capital funds.
In the footsteps of Tether, most of these newcomers are supported by the fiat, although the crypto-collateralized model of Bitshares still has its members, and coins supported by algorithms, so far limited to theoretical models and white papers, are making their debut in the world of work.
* Note: the following section examines the fiat-collateralized stablecoin. While these coins fall into the broadest category of asset-backed currencies, we have decided to forgo looking at coins that are backed by hard commodities such as gold or other assets such as property and stocks, such as coins that use these supports for stability a) they have not yet reached a sufficiently significant market or adoption rate or b) they are still being designed.
Fiat-Collateralized: The Second Coming of Old Money
As the previous history lesson explains and contrasts with the most common misconceptions, Tether was not the first fully functional stablecoin, although it aroused enthusiasm for the fiat side model.
The cornerstone of Tether is a 2012 white paper written by J.R. Willett. Entitled "The Second Bitcoin Whitepaper", the ambitious paper proposes a secondary layer on the Bitcoin network, one that would allow developers to create additional coins on its blockchain (similar in concept, although completely different in the execution of construction tokens on Ethereum).
This platform will become the Omni level of Bitcoin, the same technical launch pad used to launch Tether. The co-founders of Tether, Brock Pierce and Craig Sellars, left Willet's project in 2014 to work on Realcoin, which would later become Tether after a rebranding in November 2014. In January 2015, it began trading on the exchange Bitfinex, and the rest is history.
And that story was complicated.
The information gathered in the Paradise Papers survey in 2017 revealed that Jan Ludovicus van der Velde, CEO of Bitfinex, is also CEO of Tether Holdings Limited. This overlap has led skeptics to control the working relationship of the two organizations.
Increasing this review, a report published by John Griffin and Amin Shams, two professors from the University of Texas at Austin, tracks the issue of Tether on a handful of Bitfinex portfolios. The same report also corroborates the suspicion that Tether is printing more USDT than it has dollars and suggests that Tether was used to artificially inflate the price of bitcoins in 2017, as a result.
Even so, Tether has its defenders. Dr. Wang Chun Wei of the University of Queensland, Australia, actually published a research a month earlier than Griffin & Se; if Shams and, as if anticipating their scrutiny, found that Tether does not have a quota enough to manipulate the price of bitcoins. However, Wei's report did not erase questions about Tether's finances.
Tether could absolve himself from suspicion with a formal audit, even if he claims that this is impossible. Instead, in May 2018, Tether conducted an internal review through the law firm Freeh Sporkin and Sullivan, which confirmed that Tether's unbound assets correspond to the tokens in circulation, while acknowledging that its relationship "… should not be interpreted as the result of an audit and have not been conducted in accordance with generally accepted auditing standards. "
Without proper control over books, Tether's operations have been denigrated as opaque and related concerns are exacerbated when we take a look at Tether's liquidity. Promising in its white paper that users can redeem Tether for USD at any time, the only real way to buy Tether with fiat is indirectly at best: you should buy bitcoin or ether from a fiat-crypto ramp, transfer the coins to an exchange that supports the cable and then trades there.
The same Tether, as pointed out by Jon Evans, does not actually allow users to redeem USDT for USD. The login function on the Tether website is presumably for this purpose, but recently, new users have been greeted with a registration error that says the site is rebuilding its system.
Fiat-Collateralized: Beyond Tether
However, a growing strength of competitors supported by the FIAT took the Tether model – with some changes. These projects, in their own way, have sought to avoid the controversies surrounding Tether by offering reliable liquidity and business models that put transparency in the forefront of operations.
In the realm of fiat-collateralized currencies, Tether's main competitor is TrustToken. Like the preceding monolith, TrustToken issues tokens tied to underlying dollars. Unlike Tether, however, which plays the role of caretaker, issuer and representative for its tokens, TrustToken is more practical.
In fact, it has no degree of control over TrueUSD, its flagship stablecoin. The company leaves this to its smart contracts, commitment accounts and trust partners.
To coin TrueUSD, users must send a wire transfer with funds to one of TrustToken's trust partners (currently either Alliance Trust Company or Prime Trust), and after depositing the money in their bank accounts, these institutions use the platform's intelligent contract Ethereum issue tokens on the user's Ethereum portfolio. To redeem the tokens, the user burns them through the smart contract, which then tells the trusts to link the corresponding funds to the user.
In an interview with Bitcoin MagazineTrustToken's vice president of business development, Tory Reiss, has indicated that the platform provides its trustees with a dashboard to manage token issuance and redemption processes.
"We act on behalf of the token holder but, as a company, we can not access those funds", he stressed.
The TrustToken's labor approach sets it apart from Tether and its banking partners open clear liquidation paths for users. But this is not the only difference in the business model of the company. It also publishes weekly and monthly statements of its financial documents.
"We have a top-50 partner account (Cohen & Company) that is executing the certificate." When they look at your books, they look at all your transactions, and if your account has not been online since day zero, it will not keep a verification account, "said Reiss in our conversation.
"We have nothing to hide," he continued, in a not so subtle blow to the TrustToken competitor.
Reiss's comments and TrustToken's professional relationship with Cohen & Company undermine Tether's claims that he can not receive an adequate review. While Tether said that an audit by one of the four large accounting firms is out of the reach of a stablecoin, Reiss stated in our correspondence that TrustToken is currently negotiating with two of these companies to further legitimize its audits.
With a market capitalization of $ 100 million, TrueUSD is Tether's main competitor, even if it has significant ground to recover. But the month of September brought with it three new institutional projects that could reduce the market shares of both runners.
Two of these – GeminiUSD (GUSD) and USD Coin (USDC) – were launched as internal stablecoin for the Gemini and Circle / Poloniex bags, respectively. Both are considered potentially attractive to institutional investors for their regulatory compliance (Gemini is fully regulated by the BitLicense laws of New York, and Circle, regulated by FinCEN, is seeking money transmitter licenses from all 50 states).
The USD token runs on the Centro's stablecoin frame, a blockchain developed by Circle. Like many other newcomers, GUSD works on Ethereum, as does Paxos Standard (PAX), the stablecoin of the Paxos Foundation which, like GUSD, is regulated by the New York Department of Financial Services. All three coins allow swift fiat-to-crypto swaps without interruption and encrypted-fiat ransoms using their own liquidity portals.
Gemini and Paxos coins were burned in the weeks following their daytime launch for backdoors in their coin code allowing both associations to block funds and reverse transactions. These control mechanisms were probably needed by virtue of being regulated entities and there is no indication that both organizations would abuse them under the regulatory spotlight.
As CEO of Kowala (a stablecoin we will get to later), Eiland Glover said, is the way both organizations "are ahead of regulation, are too complacent" to give them control "to go back and block or reverse something "Traditional financial institutions enjoy control.
In Europe, STASIS, based in Malta, launched its STASIS EURS (EURS) in July 2018. The finances of the currency are guaranteed and managed by a European institution not evaluated by AAA, and has been the first exclusively euro-pegged stablecoin to hit the market.
The managing director Gregory Klumov stated that, drawing on its reserves with daily, weekly and quarterly audits Bitcoin Magazine that "STASIS has created a EURS token following the request from institutional clients, people with a high net worth and funds that trade digital goods, and we think there is a lack of stable cryptocurrency at the price with visible transparency of resources reserved. "
Takeaway and tradeoff
Acting as glorified IOUs for the respective underlying currencies, fiat-collateralised stablecoins are the least complex of the three main asset class categories.
As a result, they are also the easiest to understand. For this reason, institutional investors are likely to favor them with respect to their abstruse and technically more complex counterparts. The regulatory protections and transparency that coins such as GUSD, PAX, TUSD and USDC probably also offer to institutional investors and retail investors with little knowledge of cryptocurrency to feel at ease when they enter the market.
They also offer the safest on and off ramps for liquidity. Now, if the final game of a stablecoin is to replace cash and fiat, then this will not matter in the long run. But considering that stablecoins act primarily as a hedge for trading in their current form, ease of liquidity is a must for most investors.
Ironically, the same features that make stablecoin so attractive are the same things that could make it a turn-off for some users.
They require a baseline of trust that the institution that controls the ransom tokens will honor this commitment. The anxieties surrounding this counterparty risk are probably more felt with Tether, given its lack of transparency. Ultimately, this model reintroduces the same financial intermediaries that Bitcoin intended to eliminate. As in the case of PAX and GUSD, these same custodians have the power to directly access the funds and reverse transactions – the financial controls that most of the crypto-evangelists rejected.
Crypto-Collateralized: Taming Volatility From Within
It seems strange to use an inherently volatile resource to create stability. But for those who place decentralization as a priority above all else, the collateralised resources on the chain provide more peace of mind than off-the-counter collateralized counterparties such as Tether.
As explained above, BitUSD has opened the field by introducing the market to the stablecoin model, guaranteeing the patrimonial assets with cryptocurrency in the form of BitShares (BTS).
BitUSD has substantially lagged behind the projects that came after it, and this may be partly due to the fact that its underlying asset, BTS, offers less liquidity and is used by fewer people than the more widely recognized Ethereum.
For this reason, we will focus on the Ethereum-based Maker, on a decentralized autonomous organization (DAO) and on the stablecoin, Dai. Founded in 2015, Dai has become the most popular crypto-collateral stablecoin available with a market capitalization of $ 56 million at the time of publication and works similar to BitUSD with some key differences.
In fact, Maker's CEO, Rune Christensen, said Bitcoin Magazine that BitUSD was the inspiration for the creation of DAI.
"I joined the Stablecoin initially with Bitshares" [BitUSD], which was the first stablecoin project. And from there I and some other members of the Bitshares community decided to take this model of basic stablecoin and to modify it. At the time, you know, Tether's model was not around. The original stablecoin model was this crypto-collateralized, and shows how much the fundamental thought of space has changed – decentralizing finance – ".
Dai keeps his peg $ 1 with what the platform calls Collateralized Debt Positions (CDP), and the CDPs themselves are responsible for the minting of the new Dai. In order to coin Dai, network users must lock down collateral in a CDP and, in order to protect themselves against volatility, the CDP must be over-guaranteed by at least 1.5 times the value of Dai generated (for example, if the current market value of ether is $ 225, so to generate 150 DAI, a user should face 1 ETH).
To release the guarantee, the CDP owner must return the position debt (the amount originally generated by Dai) and any interest accumulated by the position. This will always be paid in Dai, while the user must also pay a network stability rate in MKR, the base currency of Maker, whose sum is burned by the network.
In the event that the price of Dai exceeds or decreases its target price ($ 1), the Target Rate Feedback Mechanism (TRFM) mechanism intervenes to modify the incentives of the user to generate or hold Dai. The fall below will increase the target rate of each CDP, making it more expensive to generate Dai in order to reduce the number of coins pumped into circulation. This will then incentivize users to keep Dai as he moves towards his target price, as they will increase their capital gains. With a larger number of users waiting and a lower number of Dai minted, the price will stabilize.
If the price of Dai exceeds $ 1, the target rate decreases and Dai is easier to beat to dilute the offer. The members of the community are therefore disincentive to keep Dai as the price decreases and approaches its equilibrium.
Currently, ether is the only guarantee from Dai. Called as Pooled-Ether (PETH), users must first send the ether they want to use as collateral in one of Maker's smart contracts, and the deposit of this user is redeemed as PETH for use in the CDP.
Christensen told us that the uni-collateral model of the Maker is something for the early days of the platform. The team hopes to scale the platform to accommodate "basically everything as support," he said, guaranteeing something from the gold to the property and even to the other stablecoins.
"What we are looking at is creating a stablecoin that represents a global basket of currencies, so it's a bit of a measure of global stability for a global economy."
This ambitious expansion will begin with Dai creating an anchor for the euro, with the final goal of becoming an agnostic of the blockchain to group the other assets in the Maker field.
The closest competitor to the Maker outside of BitUSD is Havven, a bi-platform stablecoin ecosystem that runs on the Ethereum and EOS networks. Just like Maker, Havven's stoverecoin, nomins (nUSD), is created through Havven's (HVN) guaranteed currency debt. Unlike Dai, however, the NUSD has struggled to catch fire with the larger crypto community and has a current market cap of just under $ 1 million.
Takeaway and tradeoff
The application, issue and circulation are led by community members for both Havven and Maker. There are no global or centralized bodies responsible for the operations of the platform and, in the case of Maker, governance and risk management are the burden of MKR holders.
With communities left to themselves and with their responsibility to coin coins, the crypto-collateralised model is more decentralized than its more popular fiat-collateralized counterpart. For this reason, crypto-collateralized stablecoins are often supported by crypto-evangelists, since they come without centralized coin controls like Tether and are more detached from the traditional financial system that the bitcoin was built to destroy.
For the same reason that decentralized decennals may be willing to approve these coins, however, investors and traditional users could avoid it. Of the millions of dollars invested in stablecoin, only 9% of this ($ 33 million) went to encrypted assets and $ 27 million of this amount was assigned to Dai.
That few dollars are behind these projects is not so surprising. While these currencies may not present the same counterparty risks that accompany custodial models, collateralised, most investors (primarily institutional or accredited) such as financial guarantees and protections that result from working with a formal banking institution.
It also speaks of the difference in complexity and perceived reliability of the crypto-collateralized model compared to those supported by fiat. A currency that is tied to the dollar because it literally represents an existing dollar is much easier to understand for the general public than the circles with which they have to jump a coin like Dai. In addition, the thought of using a volatile resource in cryptocurrencies to generate stability makes less sense for most investors than the use of a dollar-based IOU model, which is more closely resembled as currently being debited with banking debt. and credit.
Algorithmic Backed: assets supported by Math
Increasing 50 percent ($ 174 million) of all venture capital funds involved in stablecoin projects to date, algorithm-supported stablecoins (non-supportive currencies) are the dark horse of the ecosystem . And even if they have a lot of invoices that bet on them, there's no guarantee that they will eventually win – just a lot of promises and expectations to be successful.
Outside of New Jersey, the basic currency has attracted the vast majority of this funding, 133 million dollars from millions such as Andreessen Horowitz, Polychain Capital, Pantera Capital and the Digital Currency Group. The coin is inspired by its stability mechanism from the model of the Seignorage Shares developed by Robert Sams.
At its launch in 2018, Basis relies on a combination of smart contracts and bonds to achieve stability, and its model, albeit a complex one, is based on traditional economic theories and incentives to maintain its anchorage.
In short, in the event of a market expansion (when the currency exceeds $ 1), the smart grid contracts coin more coins to inflate circulation and lower prices. If the price falls below $ 1, the network will create bonds (debt certificates) and sell them for basic coins, thus eliminating excess currency from the ecosystem to support the price.
These bonds are then reacquired in times of expansion with newly minted coins and can also be sold for less than they are worth, if the demand is seriously scarce.
Carbon (CUSD), a hybrid plant with a fiat license and algo with $ 2 million in VC financing, will operate using a similar model. Instead of bonds, it will issue what is called a carbon credit token using a Dutch-style reverse auction when CUSD prices fall below the peg threshold. As a basis, these credits will be redeemed proportionally per user during events where the network has to mint new coins to bring down the price from an unwanted increase. To kick off its network, Carbon is starting on a fully supported model.
The base should be launched this year, and Carbon, which was recently launched with limited access to hedge funds, accredited players, trades and traders, is expected to have approximately $ 1 billion in legal reserves before switch to a partially algorithmic model. When they arrive on the market, they will be the first non-thirsty stablecoin to test the model of Sams' Seignorage Shares.
But they will not be the first algorithmic circular stablecoin. Kowala's KUSD, which launched the alpha for its main network in September 2018, beat them. The first stablecoin to see the integration of Ledger, kUSD applies the economic logic of the Seigniorage Shares model with one revolution.
Instead of managing price pegging through debt repurchases and mandatory inflation of the smart contract, money uses transaction fees, landlocked addresses and mining prizes. Its model is based on two coins: mUSD, token for mining rights and KUSD, the stablecoin.
The miners have the KUSD as a mining prize and, in turn, have the task of circulating the currency. In the event that the price of the KUSD rises above $ 1, the mining premiums are increased to correct the discrepancy. If the price drops too low, the transaction fees are slightly increased and a part of them is sent to an address with no address to burn from one of the smart contracts of the network.
The project largely under the radar worked closely with regulators and accredited people, said CEO Eiland Glover in an interview with Bitcoin Magazine. Its funds have been filled up with funding from private investors and, according to the SEC regulations, only accredited investors have been authorized to purchase initial sums of their mining token, MUSD.
By operating these private tours as a sale of securities, Glover intends to open the sale of this token to the public when the extraction rights of the project are distributed more widely. It is also referred to in negotiations with entities outside the United States to create Kowala coins for other national currencies and economies.
Glover also pointed out that the KUSD went through the "test after test" and the code audits before launching it, and showed the author of this article a testnet scenario guided by the coinage, circulation and of the KUSD trade to demonstrate its stability mechanism in action.
Kowala is also the only algorithmic stablecoin with open source code on an active GitHub, which can be viewed here.
Takeaway and tradeoff
Our section on algorithmic stablecoins was shorter than others for the simple reason that this model is not yet tested and untested. Even Kowala, the closest to a beta mainnet, is still in alpha and has not been processed on the encrypted market.
Theoretically, algorithmic stablecoins could offer the highest degree of decentralization. Completely detached from any underlying resources, which rely only on the mathematics behind their projects, they present themselves as the economic tool of the futurist, while the next evolution of stablecoins and cryptocurrencies is written large.
But of course, it is assumed to function as intended, and no one can say with certainty that they will. Even in the case of Basis, all the support of the world is no guarantee of success, and there are many variables that could make the model unsustainable.
Una di queste è la possibilità che uno stablecoin supportato da algo possa sperimentare una "spirale della morte". Fondamentalmente, se il prezzo scende abbastanza, la fiducia degli investitori potrebbe essere scossa al punto da incitare a una massiccia svendita – qualcosa di simile a una banca correre per la rete – e questo potrebbe inviare la moneta in una caduta libera da cui non potrebbe recuperare.
Le obbligazioni / i contratti di debito di Basis e Carbon mirano a mitigare questo rischio, ma queste reti di sicurezza operano nel presupposto che la comunità abbia abbastanza fiducia nel modello economico della moneta per a) acquistare i contratti in primo luogo eb) trattenerli abbastanza a lungo per riscattarli. Essenzialmente, si basano su una convinzione che la rete stessa detenga valore; se questa credenza viene distrutta, non ci saranno abbastanza acquirenti per raccogliere i pezzi.
Con così tante monete, dove andiamo da qui?
Vale la pena sottolineare che gli stablecoin esaminati in questo articolo non sono esaustivi. Per ora, abbiamo coperto solo gli stablecoins più importanti di ogni classe, concentrandoci principalmente su quelli che hanno già lanciato.
Ce ne sono ancora altri, alcuni dei quali hanno attratto attenzione e capitali significativi. Saga, ad esempio, ha raccolto $ 30 milioni di dollari in venture capital, e il suo team e i suoi consulenti vantano un ex dirigente di J.P. Morgan, un ex banchiere centrale e persino un economista premiato con il Nobel. Il suo piolo attingerà al diritto speciale di prelievo del Fondo Monetario Internazionale, una riserva di valuta estera che rappresenta un indice delle valute nazionali per fungere da unità di conto.
Se riusciamo a ricavare qualsiasi cosa dal track record istituzionale della sua squadra e della sua economia, il design di Saga è rivolto agli investitori della grande lega. Nel corso del tempo, il suo meccanismo di stabilità dei prezzi gli consentirà di mantenere il proprio peg senza fondi completi per restituire tutti i gettoni in circolazione, una caratteristica che potrebbe essere troppo simile a quella dei prestiti di riserva per i credenti più fondamentali della cripto.
Con un finanziamento di 32 milioni di dollari, il sudcoreano Terra offre un paniere di risorse per garanzie come Saga. Un po 'del conglomerato mostruoso di Frankenstein dei meccanismi di stabilità che abbiamo visto, la moneta sarà inizialmente sostenuta da fiat, successivamente appoggiata da Luna – una valuta per gli stakeholder della rete che depositano Luna in una Stability Reserve – e in seguito sarà zavorrata grazie a commissioni di transazione (queste commissioni vengono pagate ai titolari di Luna e aumentano in caso di calo dei prezzi). È previsto il lancio nel quarto trimestre del 2018.
In ogni caso, la miriade di meccanismi di stabilità e la divergenza di questi anche all'interno di ciascuna sottocategoria di stablecoin dimostra che la classe di attività è ricca di varietà e, come dimostra il numero di progetti annunciati e lanciati nel 2018, sta subendo una crescita eccezionale scatto.
Ancora, il modello, in tutte le sue forme, ha una lunga strada da percorrere prima che diventi completamente redditizio come metodo di pagamento o deposito di valore. È necessaria l'integrazione del commerciante e l'adozione della comunità, oltre a un track record di valore sostenibile (anche i più vecchi stablecoin hanno meno di mezzo decennio) e la fiducia dei consumatori.
Questa fiducia può essere tenue nel breve periodo, dato che una manciata di stablecoins ha visto i loro pioli spezzati ad un certo punto della loro vita (es. TrueUSD è salito a $ 1,30 dopo essere stato quotato su Binance, salendo di nuovo a $ 1,20 cinque giorni dopo; a partire da $ 0,86 il 28 febbraio 2018 e Tether è addirittura sceso a $ 0,57 nel 2015, anche se al suo lancio).
Despite its initial plummet upon going live, Tether has remained incredibly stable, and this may explain, in part, why it still accounts for roughly 98 percent of all stablecoins’ market volume.
Of course, this could also be indicative of a lack of competition, something that has been ramped up as of late. With a slew of new coins joining the market race, it’s possible that each coin could serve its own distinct function in the ecosystem as it matures, something both Christensen and Glover expressed in our conversations.
“People have different demands for what they want from the stablecoins they use,” Christensen put it simply in our conversation.
“We definitely think that for the vast majority of people, they just want to use the currency they use,” he continued, stressing that, for adoption to stick, “user interfaces and DApps [must be] really easy to use.”
Glover echoed Christensen’s thoughts, believing coins like the GUSD, PAX and USDC aren’t “really transaction coins” as they were “built for trading” more specifically.
When we consider the above coins’ painstaking emphasis on regulations and the traditional financial controls they have in place, Glover believes these coins will be more appealing to institutional investors looking for a safer in to the market. He also believes legacy companies and institutions are starting to see the benefit of blockchain and cryptocurrencies, something the influx of investment capital and stablecoin projects in 2018 stands testament to.
But for these institutions to buy in, they’ll need that previously elusive — or eluded — guarantee: regulation.
“I see this as institutions now starting to plug in blockchain and crypto into an existing world. To do that, you have to make it fit,” Glover said.
Christensen believes that regulation is both inevitable and necessary, both to embolden the ecosystem and demonstrate to government officials that it isn’t some boogeyman it should simply fend off.
“I think it’s absolutely crucial. First of all, we need to turn around the image of cryptocurrency away from the early days of destroying the governments, destroying the banks and being used for shady stuff on the internet. And secondly, we need to engage with government and explain to them that this is not going to undermine their ability to control their national currency. For instance, all the stablecoins are pegged to national currencies already — they’re not being circumvented. It’s important that regulation comes to protect consumers, but that it doesn’t interfere with the fundamental advantages of blockchain technology.”
Where these regulations will take the industry and when they will be affected (if at all), is hard to say, especially when you consider the complexity of this newer asset class within a new and largely misunderstood asset class in cryptocurrencies. In the U.S. context, for instance, stablecoins like Basis and Kowala, which both offer profit potential for their users, could very well be seen by the SEC as securities, while asset-backed stablecoins may be seen as commodities by the CFTC for acting as economic instruments.
Capping off our discussion on regulation, Glover indicated that, to remain viable amidst the “moving goalpost of regulations,” projects are running to regulatory guidance instead of away from it. This act of self-preservation couold be interpreted as a show of legitimacy for what use to be a stigmatized industry, but it also means walking the line between what that space is about and what it is primed to become in the larger economy.
“I think a lot of people got subpoenaed and that was a ‘game over.’ You want to do things in a way that preserve the integrity of the stablecoin, but you don’t want to be shut down. I think there is a move toward compliance. Everybody's seeking out a safe haven where they can feel comfortable that they’re operating under some regulation that protects them. Because now all of this stuff is turning into a real business.”
