Binance is the kingmaker in a turbulent stablecoin market

The trust is undoubtedly not the major lever from growth from stablecoinssuggests Kaikoin reference to the domination from Tether. With its firepower, Binance can also drive a token. The proof with TUSD.

Tether has been challenged several times on the transparency of its reserves, unlike Circle and the USDC. This does not prevent theUSDT to outrageously dominate the stablecoinsKaiko reminds us in its latest Deep Dive report.

This market continues to change. In 2023, Kaiko even talks about an upheaval. And for good reason, since the BUSD, the former number three stablecoin, will disappear in 2024. Its end date is known. DAI and USDC were affected by the March banking crisis.

Huge impact in 2023 on the stablecoin market

As for TUSDBinance is now putting all its weight behind its zero fee policy.

All these events have had a huge impact on the structure of the stablecoin market,” writes Kaiko.

And the big winner is once again USDTwhich has become “the most reliable stablecoin in the industry” due to its resilience. Another finding is that stablecoins have never been more important to the crypto industry than in 2023.

On centralized exchanges (CEX), these tokens are increasingly crushing the declining fiat trading. The market share of stablecoins has increased from 60% in 2022 to 76%. this year.

USDC, a champion shaken in 2021 and 2022

Regulation in the US and the disappearance of payment rails only accentuates this phenomenon.

As a result, “the dominant stablecoin has even more influence on the health of the market than before. That leader is the USDT, which will be nearly five times larger than the USDC in terms of capitalization by 2021.

This dominance has been challenged over the past three years, however. During the bull run of 2021, the USDC was growing faster than its rival, as was the BUSD driven by the Binance war machine.

By 2022, Tether was losing $12 billion in capitalization when USDC and BUSD were gaining ground.

30% volume share for TUSD on the CEX

However, everything changed in 2023reports Kaiko. The banking crisis has plunged the USDC. BUSD lost more than 60% of its capitalization. As for TUSD, its “was boosted by favorable treatment from Binance”.

The indicator of the capitalization is not sufficient to accurately describe the upheavals of 2023. Thus, the analysis of trading volumes highlights the surge in TUSD. Its volume share has risen from “0% two months ago to more than 30% today”.

TUSD’s rise and BUSD’s fall demonstrate Binance’s power in the stablecoin market,” notes Kaiko.

Binancea kingmaker. “The reason for which Binance has crowned the TUSD as the favorite stablecoin is still unclear,” the report added.

And at the same time, “USDC volumes on the CEX have fallen to virtually zero, while another centralized stablecoin, USDD, has virtually no trading volume on covered exchanges.”

USDC Preferred to USDT in DeFi

On the DEX, the picture changes again. Thus, the DAIjudged to be too dependent on the USDC, “fell into disgrace”. The sanction was severe:

Its share of DEX volume has suffered, dropping from market leader with 28% of volumes in 2021 to just 2% today.”

Tether’s dominance, on the other hand, is fading here. The report highlights “the rise of USDC as the market leader and the fall of USDT in DeFi trading. For DEX traders, USDC is the preferred currency.

How can such a difference between CEX and DEX be explained? For Kaiko, this difference suggests two different types of investors.

CEX traders are probably less concerned about centralization risks and prefer USDT to be the leading stablecoin in the market. This is despite the opacity of Tether’s reporting of the reserves that support USDT,” the report posits.

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