There have been several interesting months for Tether, the biggest stablecoin in the world by marketcaps.
Following a massive fluctuation in the price of Tether in October, Bloomberg reported that Tether seemed to be solvent: an extremely positive news for the company, whose solvency has been questioned for over a year.
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However, the fall in prices in October managed to cause some serious damage to society and its currency. A recent report by the research firm Diar said that Tether's dominance in the stablecoin market had fallen below 70% for the first time.
Perhaps the most important question that emerges from this statement is this: is the Tether losing popularity, or the stablecoin market as a whole continues to grow while Tether remains the same?
There are some data that suggest that the first rather than the latter, although it is certainly true that the stablecoin market has grown as a whole, Diar reported that the total sttecoin got under way at 2019 to $ 2.2 billion, almost double the $ 1.3 billion total market offer at the start of 2018.
The problems started with the fall in prices in October
Tether's dominance was a great success in October, when its value suddenly took a dip from around $ 1.00 to $ 0.85 on some bags. It took weeks before the coin reached its target value of $ 1.00.
Regulated stable currency, lol pic.twitter.com/5SRMhhh32Y
– CZ Binance (@cz_binance) October 13, 2018
The root cause of the dive seemed to be a sort of "bank-run" on Tether that began at the beginning of October. Token holders redeemed more than $ 800 million for US dollars throughout the month, ultimately resulting in a 16% loss in market dominance before the end of the month.
The timing of the dive was particularly poor for Tether, as two major new stablecoins had just arrived on the scene a month earlier: the USDC of Circle and Coinbase, the Gemini Dollar (GUSD) and the standard token of Paxos . Previously, Tether had only two truly valid rival coins: Maker & # 39; s Dai (DAI) and TrustToken & # 39; s TrueUSD (TUSD).
The fall of mid-October in the price of Tether offered these rival coins the opportunity to gain new footholds in the market in general. "Tether has definitely lost market share in terms of the USD offering allocated to different stablecoin," Cointrik creator Nic Carter told CoinDesk, adding that USDC and TUSD were the most profitable currencies. Coinmetrics is a blockchain data search site.
Indeed, before the middle of October fell in Tether's price, "Tether consisted of about 94 percent of the total supply in stablecoins, which fell to 83 percent after the race," explained Carter.
#To tie he is losing his grip on market domination. He lost over 20% of the #stablecoin market in the last year, thanks to more transparent competitors. Some competitors even manage to provide a #decentralized stability solution!#cryptocurrencyhttps://t.co/7f8P6lnWr7 pic.twitter.com/NJUZY1jc3v
– Zero Element Network (@ElementZeroCOIN) 21 January 2019
The decrease in the dominant position on the Tether market was also notable from the trading of stock exchange data. Indeed, during the fall in prices, OKEx, Huobi and a number of other exchanges were quick to list alternative stablecoin alternatives for their users.
However, Carter noted that data on the volume of trade showed a less robust trend compared to market capitalization data. "Trading volume is limited to alternatives because traders are not yet used to them," Carter said, adding that "cable is still considered a useful (though risky) currency for traders to get a risk named" fiat. "It has only the accumulated financial infrastructure."
Data on chain transactions also showed a decrease in Tether transactions throughout the month of October, while other stablecoin saw an increase in chain transactions.
Tether destroyed $ 500 million in USDT at the end of October
A further contribution to the decrease in currency domination was the decision to destroy 500 million USD units at the end of October, perhaps in an attempt to strengthen the USD price to $ 1.00. At that time, the US $ 500 million accounted for more than half of the total amount of USD in circulation.
"Over the past week, Tether has redeemed a significant amount of USDT from the circulating coin offer, and in line with this, Tether will destroy $ 500m from Tether's treasury portfolio and leave the remaining USDT (around 466m) in the portfolio as a preparatory measure for future USD emissions, "read a Tether statement on burning tokens.
Tether has just destroyed $ 500 million from Tether's treasury portfolio with the following tx: https://t.co/HTG52LaRVh
For more information see the announcement here: https://t.co/McLTCGzmJi
– Tether (@Tether_to) October 24, 2018
"Conceptually, the process of issuing and redemption of Tether is outlined in the Tether white paper, with visible issues and redemptions through the observation of the balance of Tether's treasure on the OMNI blockchain."
An opaque past traces Tether
Despite Tether's attempt to be transparent about token burns, the company has undergone a thorough check in the past for its lack of transparency. Serious questions have arisen around the solvency of Tether due to the company's failure to present a legal audit of its accounts.
However, Finance Magnates reported at the beginning of this month that Bloomberg was among a growing list of entities willing to compete for Tether's solvency, although for some, this was not enough. "When we talk about money, it's not really enough to talk to a journalist to convince them," said White Company CEO White, in an e-mail to Finance Magnates.
Rather, "the compelling must be done directly to the public and Tether owners." While Bloomberg is certainly a reputable publication, it is not a regulator or a user of Tether, and the crypto community deserves to have this alleged "test information" shared with their. "
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A slippery slope
Despite the whiteness of positive news, Tether's dominance fell to a minimum of three years towards the end of December. "Only three months ago, Tether's dominance was still around 96%," a report by The block said at the time.
From there, things have continued to get worse.
On January 10, Tron overtook Tether as the new eighth cryptocurrency in terms of market capitalization in the world (although he has since risen to the sixth largest place, leaving Tron in the dust again).
– Misha Lederman (@mishalederman) 9 January 2019
Then, on January 14, the research firm Diar published a report stating that Tether's domain had officially slipped even further with only 69% of domination on the same day.
"While Tether remains to control 69% of supply, the USDC supported by Circle / Coinbase has absorbed 13% of the stablecoin market in less than 3 months – a nice tally of over $ 372Mn", reads the report , further confirming the presence of Carter. statements at the end of October. "In total there was a 26% growth in exceptional stablecoin from the beginning of November after the massive Tether burn".
However, it is important not to underestimate what Tether managed to save after its hard end last year. "However, cryptocurrency trading is still very focused on Tether," the report reads. "So far, January has seen Tether's daily trading of $ 4 billion, while USDC is on average less than $ 20 million according to data gathered by Diar."
"Tether has never been a good product"
On a somewhat harsher note, however, Diar added that "even this (sic) will probably be successful as more cryptocurrency exchanges begin to add more stablecoin pairs".
Why is this? Technology Futurist and Principal Consultant at Rocky Mountain Technical MarketingJeff Stollman told Finance Magnates that the answer is simple: "Tether has never been a good product".
"There is a lack of transparency for users to be sure that it will retain its value," he explained. In fact, "Tether never made his reservations public, and their resistance to it raised further concerns about their ability to resist a speculative attack."
Stollman said that the only reason Tether reached market dominance was primarily because of the "first mover" advantage. "Tether achieved early dominance in the stable currency market just because it was one of the first products and the Tether team was successful in getting it into various trades," he said.
"It provided a relatively stable way of storing the value in an encrypted account that could easily be exchanged for other cryptocurrencies bought or sold for investment purposes, using Tether was both cheaper and faster to get in and out of money."
However, "now that more stablecoins, more transparent, are on the market, there are few reasons to use Tether." Migration to others has been slow only because it is necessary for trades to select stablecoin that will support trading pairs before other currencies can be used. "
The future (…?)
What can be very significant is that during all of this – the dive, the shift and even Bloomberg's announcement that Tether is most likely solvent – is that Tether remained mostly silent. All four tweets were published by the company from the beginning of October. The only one to recognize one of the events was the announcement of the burning of tokens.
The other two refer to a new bank account:
We are pleased to confirm that Tether has an account with Deltec Bank & Trust Limited https://t.co/LSn64soUsC. Confirm balance at 2018-10-31 in attachment.
– Tether (@Tether_to) 1 November 2018
And a new concept verification platform:
We have a great announcement! Today we are proud to launch a redesigned platform for the verification of new customers and the direct redemption of Tether on fiat through https://t.co/XS46TbUCuL.
To learn more, go to https://t.co/Nn3WUrnRuA.
– Tether (@Tether_to) November 27, 2018
Of course, these two announcements are good news for the company. But will Tether's attempts to turn themselves over will be fruitful?
Only time will tell.