The battle for the first place in the stablecoin market

The consequences of the collapse of the third largest stable UST coin still have an impact on the cryptocurrency market: Tether is losing capitalization due to the opacity of reserves and may soon give way to USDC from Circle. At the same time, the developer Shiba Inu announces the imminent appearance of a stable SHI coin.

Capitalization of UST, $billion Capitalization of UST, $billion

Before losing its peg to the US dollar, UST was in third place in the rating of stablecoins after Tether and USDC with a capitalization of $ 19 billion. The rapid collapse of a major project raised the question of the degree of reliability of other stablecoins. Since the quality of Tether reserves and the policy of issuing coins were often criticized, the capitalization of USDT began a rapid decline. From $83 billion in May, it dropped to the current $66 billion.

In an attempt to rectify the situation, Tether management announced a reduction in the share of commercial securities in reserves from the current $20 billion to $16 billion by the second quarter (the report on it has not yet been published). However, it is worth noting that initially Tether promised full coverage of each issued USDT dollar in the bank account. The discrepancy between the actual state of things and the initial promises led to the washing out of the USDT share during the crisis.

USDC is coming on the heels of USDT: the gap in capitalization has decreased to $ 11 billion, and if the trend continues, Tether will soon be shifted to the second line of the rating. The USDC has more transparency: Circle is registered in the USA, and the reserves report is published on a monthly basis. The reserve consists exclusively of fiat and short-term US bonds, which implies the rapid deployment of funds to maintain liquidity.

Before the collapse, UST showed phenomenal growth, and the internal LUNA coin (Terra project) in 2021 grew 130 times and became the only one of the TOP 10 to update the maximum in 2022.

This success inspired other participants to create their own stablecoin. In early May, Justin Sun (Tron network) presented USDD, and now meme projects have also caught up. Developer Shiba Inu under the pseudonym Shitoshi Kusama announced the release of the SHI stablecoin in 2022. The decentralized coin will be built on an “experimental protocol” and, according to Kusam’s assurances, will avoid the fate of UST.

USDD, despite its youth, has already faced the first crisis, and the exchange rate of the coin sank to 92 cents. SHI, judging by the statements, will also be an algorithmic stablecoin. Most likely, the stable coin market will not be without new shocks.

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