How many giants can the stable currency track squeeze out?

Produced | Odaily (ID: o-daily)

Produced | Odaily (ID: o-daily)

It wasn't until last year that someone finally discovered its value. The release of the Libra white paper this year has brought more attention to this track.

On August 19, Binance, the world's largest cryptocurrency exchange, announced the launch of the "Venus Project". Venus wants to build a "regional version of Libra" against Facebook's Libra.

People are all too familiar with Libra. Libra wants to restructure the financial system and issue its own tokens on the blockchain network. The tokens are anchored to a basket of legal currencies, which is the so-called "stable currency." Simply put, this stablecoin wants to provide a universal payment function for the world.

Based on the statement of "regional version of Libra" given by it, people speculate that Venus will most likely be a stable currency. But He Yi later responded that "Venus" is not a simple stable currency, but a Libra for the Belt and Road Initiative.

Whether it is a stablecoin or Libra, there is no doubt that after Binance launched the Morning Star program, a new heavyweight player has been added to the stablecoin battlefield.

This once again tells us that stablecoins are becoming a battleground for military strategists.

However, the rise of stablecoins started as early as 2018, but some people did not pay attention to it, and some people entered the market early. Today, with the entry of giants such as Facebook and Wal-Mart and the demand of major public chains, the stablecoin market will further expand.

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Binance Venus is going to be the "Libra of the Belt and Road"

The morning star is the first star that can be seen on the eastern horizon before dawn.

From the beginning of the name, it more or less indicates Binance’s high hopes for this plan-Binance wants to join the wave of stablecoins in 2019 and become a “new star” leading the industry.

After the official announcement of the Venus Project, Binance’s “Chief Customer Service” He Yi also personally reposted the news in multiple communities and worked hard to promote it.

The content of Binance’s announcement did not mention the specific plan of Venus, but rather described the vision of Venus—to break financial hegemony, reshape the world’s financial system, and allow late-developing countries to gain more financial initiative and protect their own interests. Financial security, improving the efficiency of collaboration between countries and people.

After reading Binance’s announcement, industry insiders have analyzed that Venus will most likely be a stablecoin. Some people also saw the ambition behind Binance’s plan, and commented: “The Venus Project has the sense of a declaration to start a new strategy, and it also has the meaning of calling out the government’s advice.”

He Yi's response also confirmed these views. She said that "Venus" is not a simple stable currency, but a Libra for the Belt and Road Initiative.

Binance is also bullish on stablecoins, even if it didn’t keep pace with competing products at first. In The Block’s report, He Yi said: We believe that in the near and long term, stablecoins will gradually replace traditional fiat currencies around the world and bring a new balance standard to the digital economy.

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Stablecoins are frequently favored, and demand explodes

As early as 2018, stablecoins came to a critical year for their own development.

This year, the stablecoin industry staged a "turnaround battle", and the stablecoin, which had been on the fringes and no one cared about before, entered the mainstream's field of vision.

This market used to only have USDT issued by Tether, but there was a huge fluctuation that year. Let the market feel that USDT is not monolithic. What's more, the outside world has already noticed its huge market.

Previously, the USDT issued by Tether has been in a gray area. And just last year, GUSD and Paxos, two US dollar-anchored compliant stablecoins, were approved by the New York Bureau of Financial Services to go online. The prospects are impressive.

At the end of 2018, some practitioners looked forward to the future stablecoin market, saying: "Stablecoin will be a market worth hundreds of billions of dollars."

At that time, leading exchanges such as Huobi and OKex were already planning to issue their own stablecoins. After entering 2019, large companies have successively announced their entry into stablecoins, not only stablecoins such as JPMcoin that circulate among institutions, but also stablecoins that focus on payment services such as Libra and Wal-Mart’s cryptocurrency.

Reshaping cross-border payments with cryptocurrencies is a story that most giants are happy to tell when they issue stablecoins. This is due to the huge prospects of the cross-border payment market. According to McKinsey data, the global cross-border payment revenue in 2017 was US$206.3 billion, accounting for 10.6% of the total payment market.

The entry of giants has made the concept of stable currency popular in 2019, and the surge in digital currency market has also stimulated stable currency to a certain extent.

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The entry of giants into stablecoins has aroused the attention of the industry

It used to be the vision of Bitcoin to become a means of cross-border payment. Now it seems that the stable currency is the first to realize this vision.

Whether it is Facebook, Wal-Mart, or JP Morgan and other giants, the stablecoins launched by them all exist as payment channels, but the targets are different.

Huobi and OK, the two exchanges that issued stablecoins before, in the initial conception or realization, most of their stablecoins serve their own exchanges or public chain ecology, and have not yet "blatantly" called out for cross-border payments. Binance mentioned a similar path when it came up, and even directly mentioned three reasons initiated by Binance in the announcement:

1. Binance has cooperated with regulatory authorities in many countries and regions around the world, and has a mass base.

2. Binance Chain has the technical foundation and cross-border payment system to safely operate new stablecoins. Previously, in the issuance of stablecoins based on BTC and Euro, the transfer speed was comparable to that of traditional bank payment systems.

3. Binance will provide full-process technical support, compliance risk control system and multi-dimensional cooperation network to help the regional version of Libra "Venus" rise.

Binance directly advised the central governments of various places to "allow private enterprises to issue digital stable coins and develop cross-border payment and settlement systems."

From these statements, it can be seen that the Binance project is not only aimed at digital currency transactions themselves. This is apparently also inspired by giants such as Libra.

A KOL BTC sniper on Weibo who likes to analyze digital currencies even analyzed that Binance’s real idea is to be a currency exchange bank.

Wanhui Dovey Wan, founding partner of Primitive Ventures, has a similar view. She analyzed that Binance’s move is to compete for the supreme strategic position of Binance Chain and issue digital legal currency on the chain.

"On the one hand, it is inspired by Libra. On the other hand, the prospect of stablecoins, from now on, will only get better in the future." A practitioner analyzed to Odaily that Binance is optimistic about the demand for stablecoins in the future.

Yang Mindao, the founder of DForce, also believes that in terms of cross-border capital flows, Bitcoin and Ethereum were mainly used before, but now most of them have become stable coins. Especially in cross-border capital arbitrage, this demand is huge, and now it is dominated by stable coins, which can replace Bitcoin and Ethereum.

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The new public chain is launched, and stable currency becomes a basic function

Another variable that will attract attention to stablecoins in 2019 is the launch of more and more public chains.

Odaily previously reported that before April 2019, all mainstream stablecoins in the cryptocurrency market were issued based on the ERC20 standard (USDT was also issued based on the Bitcoin omni protocol), that is, they were issued on the Ethereum public chain.

However, by April of this year, this situation was broken, and stablecoins began to enter other public chains.

On April 4, IOST announced the issuance of the stablecoin iUSD based on USDC and TUSD; on April 9, TRON announced the launch of the TRC20-based stablecoin USDT; on May 1, ONT announced the issuance of the stablecoin PAXO based on the Ontology OEP-4 protocol. Later, USDT cooperated with Algorand to issue USDT on the latter network.

Liu Changyong, founder of Zhimi University, believes that public chains need to compete for successful stablecoins that can bring huge traffic. "Mature stablecoins are the object of public chain competition."

"Stable coins have less demand for public chains, and public chains have greater demand for stable coins." Lin Jiapeng, founder of Linkvc, explained that public chains need stable coins to run on them, which indirectly proves the commerciality and security of their public chains, " If the public chain technology is not strong, the stablecoins on the public chain will soon be compromised and data tampered with.”

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Stablecoins have become the new darling of fundraising for project parties

The popularity of stablecoins is not only the halo brought by the entry of giants, but also the preference changes in the digital currency market.

The ICO used to drive the price of Ethereum to the sky, but now, Ethereum has fallen by 80%. Price fluctuations make project parties seek more value-preserving currencies, and moving towards stable coins has become a natural choice. Stablecoins have gradually replaced ETH and BTC and become the main object of fundraising for project parties.

Since the beginning of this year, Nervos, a project developed by former Ethereum developer Terry, has launched a public offering, but only accepts stablecoins. The private placement of the star public chain Algorand and the Dutch auction of Coinlist are all settled through Circle, with US dollars as the final settlement unit.

Yang Mindao said in Odaily’s community question and answer, “In the past two years, the project party used Ethereum or Bitcoin to raise funds, and continued to keep digital assets. In fact, they are betting on digital assets in a long way. As a startup project And the team, most of the cost is anchored to the legal currency, if you do not exchange for the legal currency and keep the digital assets of the non-stable currency, you are actually using the money given by the investor to go to the casino to open a long position.”

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Competing with USDT and Libra on the same track, who will win?

Stable demand has exploded, but the market is dominated by a single player, and new entrants are not easy to eat.

In 2018, when compliant stablecoins appeared, some people predicted that the stablecoin market in 2019 would belong to compliant stablecoins. Gemini and Pax would capture Tether’s market share in a large area, and tether (USDT) might be hit hard.

However, Tokenview’s recent data analysis has come to the opposite conclusion: whether it is from the market share or the performance of data on the chain, USDT reflects its unshakable status. To replace USDT, there is still no sign of it in the short term.

At the same time, after the market rebounded in the middle of 2019, the demand for stablecoins from new entrants has increased frequently, the market structure of stablecoins has become larger, and USDT is also continuously issued.

Odaily reporters consulted Stablecoinwar data and found that as of press time, USDT’s share in the stablecoin market accounted for as high as 81.9%, followed by USDC with a market share of only 8.46%.

"It is impossible for everyone to beat USDT." Industry insiders analyzed that even if stablecoins are sharpening their swords towards USDT, USDT will still be the market leader.

Even though the current blockchain is in the early stages of development and the stablecoin market still has great room for growth, but in the matter of to C transactions, the status of USDT's big brother is difficult to shake in the short term.

If Venus hopes to become a new generation of stablecoins in the trading scene, it will inevitably compete with USDT.

Of course, each company has different ideas about the application direction of stablecoins. USDT is more for digital currency investors, while Facebook's Libra is more for ordinary people who have cross-border payment needs or the rapid depreciation of local currencies.

As far as the vision of Venus disclosed by Binance is concerned, Venus is on the same track as Libra and others.

I'm afraid this direction is more difficult, because before it attracts C-end users, it must first persuade countries to regulate.

"This is the social effect brought about by Morgan Coin and Libra..." analyst Hong Shuning summarized the core of Binance's Venus plan. In his view, there is no essential difference between centralized stablecoins and electronic payments, and he does not think that Binance can become the "World Bank" through the Venus Project.

"It is almost impossible for Binance to convince the regulators of big countries. To surpass an organization like the World Bank, either a decentralized system like Bitcoin, or the cooperation of big countries." Hong Shuning said