Buoyed by Tether’s trials and tribulations over the past couple of weeks, a slew of coins are vying to displace it to become the most valued stablecoin. In a bid to attract more traders to use their platforms, centralized exchanges also seem to be promoting new stablecoins of their own through aggressive listings. In the past few weeks, Binance listed Paxos and True USD, Bittrex listed True USD, Gemini came up with their native GUSD stablecoin and HitBTC listed DAI (in Jul’18). In the same vein, Coinbase announced the listing of Circle-backed USDC yesterday, which will be available for Coinbase users to trade, expect for those in the state of New York. Next, Huobi and OkEx followed suit by announcing the integration of four stablecoins on to their platforms.
To be sure, the highest-funded stablecoin project “Basecoin” has not even launched yet! What felt like an obscure and banal innovation a few years back, is fast leading to a proliferation of projects engaged in a full tilt land-grab shootout amongst themselves.
In the short run, stablecoins do a terrific job of bringing into the crypto ecosystem new participants who are mostly the “trader” kind and need fiat exposure to hedge their crypto exposure. Additionally, for lay users, stablecoins offer the USD price stability that most users have gotten used to, thereby ensuring, arguably, a smoother transition from the fiat world to the crypto world. Stablecoins might also be the critical missing piece of the puzzle that can kick off adoption for DApps like Augur.
However, Stablecoin projects suffer from low barriers to entry and lack of economic moats that preeminent projects like Bitcoin and Ethereum offer due to their rich developer teams, vibrant communities and unique value propositions. Stablecoins can be an important cog in the new digital economic machine, but they cannot ever be the entire ‘machine’ or the ‘computer’ or the ‘economy’ which Bitcoin or Ethereum could yet very well be.