"Unstable" Stablecoin Market | "Vitality" Cloud Summit
Stablecoins have been a well-deserved spotlight of late.
On the one hand, it is because after the cryptocurrency market plummeted on March 12, stablecoins generally had an excessive premium, and the USDT off-market premium was as high as 8%. It reached 1.3 billion U.S. dollars, reaching 0% of its market value, and its total market value reached 6.2 billion U.S. dollars, ranking fourth. What is even more exaggerated is that the transaction scale has surpassed Bitcoin in an all-round way, and is close to the sum of the daily transactions of the top three mainstream currencies.
On the one hand, the hidden danger of USDT’s thunderstorm has always been a common topic in the currency circle. On the other hand, new stable coins have been emerging, but the market size has not yet improved significantly.
On April 10, Odaily held the first online summit forum (Click to enter the live roomfirst level title
The following is the original dialogue edited by Odaily, enjoy:
Hao Fangzhou:Yang Min said:
Yang Min said:Hello everyone, I am Mindao, the founder of dForce&Blockpower. I entered the digital currency market in the second half of 2013. At that time, I was mainly engaged in transaction-related businesses. Later, I participated in the ICO of Ethereum. I have been in this industry for six or seven years.
What dForce is doing is a full-stack DeFi ecosystem, including asset agreements, lending agreements, and trading agreements. In 2018, we were doing Stake-related research. At that time, we made USDx - a synthetic index stable currency, which was our first asset-based agreement project.
In addition, in addition to USDx, we have built the Lendf.Me lending platform on the lending agreement. Lendf.Me is now the world's largest DeFi lending system among fiat currency stablecoins. From the perspective of locked positions, it should also be among the top four in the world .
Mable Jiang：Hello everyone, my name is Mable Jiang. I am currently in charge of investment in the Asia-Pacific region at Multicoin Capital. In fact, we have hedge funds, and we have our own venture capital. We will be involved in the investment in the primary market and the secondary market.
However, recently we will pay more attention to the secondary market and the impact of the entire macro-financial market on investment in the currency circle. Of course, we still have a layout at the first level, because when the industry is in the first-level market and financing is relatively difficult, there will be relatively large room for valuation in all aspects.
Frank ling：Zhang Yuanjie:
Zhang Yuanjie:Hello everyone, Conflux is a public chain project. Currently, stablecoins are a very important part of the public chain ecology. Stablecoins have reached a total market value of 8 billion US dollars this year. Some people even say that the market value of stablecoins is expected to surpass Ethereum this year. I think this year is a very good time for stablecoins.
Hao Fangzhou:Yang Min said:
Yang Min said:Since USDT was issued in 2015, additional issuance will occur every time the market fluctuates greatly. However, since the beginning of last year, many exchanges have launched contract transactions, especially the explosion of perpetual contracts (the transaction volume is close to 10 billion US dollars), which has also promoted the market demand for USDT itself. This phenomenon did not exist before 2018. .
The recent issuance of stablecoins has also superimposed a very important factor-the new crown epidemic. This epidemic has led to the interruption of global trade flows. Previously, most of the cross-border capital inflows and outflows were done by the currency issuance platform, because we ourselves There is also a trading team, so the perception of market front-end information is still very fast, including the premium of USDT in the RMB market reached more than 5% a while ago, which is very high, and there has been no such situation in the past six or seven months. There are now a large number of people using stablecoins to transfer funds across borders, which is also an important factor for the issuance of stablecoins. And everyone should pay attention, this additional issuance is not just USDT, USDC, HUSD, and BUSD have a large number of additional issuances, and the entire stablecoin system has additional issuances, not a single stablecoin.
Mable Jiang：In all extreme market situations, the logic of additional issuance can be understood to a certain extent as the "flooding" of the Federal Reserve. To put it more bluntly, for any stablecoin, they are symbiotic with the encryption market.
The demand for additional issuance of stablecoins in the currency circle is mainly reflected in arbitrage, deposit and withdrawal requirements, and cross-border settlement.
After the "3.12" market crash, USDT has a high premium, so many traders use USDT for arbitrage.
The sharp drop in the currency price has prompted some people to withdraw money because of risk avoidance, and some people want to come in to buy bottoms. The demand for deposits and withdrawals has stimulated the additional issuance of USDT. The last thing to talk about is cross-border settlement, which is sure to flow around the world in a short time They are all USDT or other relatively easy deposit and withdrawal methods are used as liquidity windows, so the demand for stable coins will definitely surge.
Frank ling：I personally think that the additional issuance of stablecoins has nothing to do with the market in the currency circle, because Bitcoin fell to a new low not long ago. I personally think that it is mainly due to the increase in leverage in the mining industry or other fields in the currency circle. This increase in leverage is mainly It's leverage on debt.
On the other hand, I think USDT has been out of the currency circle. In March this year, the exchange rate of most currencies except the US dollar against the US has reached a new low in the past ten years. At this time, the only way for everyone to obtain US dollars is to obtain the US dollar except in countries with exchange rate controls. It is stable currency. Some Iranian mine owners I know use USDT and BTC, and a large number of assets they hold are USDT and BTC. This is a very interesting thing.
Zhang Yuanjie:
Zhang Yuanjie:First of all, I would like to say that it is very obvious that stablecoins are out of the circle. On the other hand, stablecoins are also squeezing the role of Bitcoin. At present, the efficiency of Bitcoin is still very low. In addition, its price fluctuations make the profit margins of the profiteering industry very large. At present, Looking at USDT is obviously a better choice. In this case, USDT will naturally replace some of the functions of Bitcoin.
The economic recession and the reduction in trade have made the role of USDT more apparent. For example, in some countries in the Middle East, there are more and more obvious changes. Many people have changed from believing in Bitcoin to believing in Bitcoin and USDT, and USDT has become the place of faith. I would also like to talk about the perspective of "demand". This "demand" first originated in China, and then it radiated to other countries. First of all, it must be linked to China's demand for currency speculation. The trade of other countries is related to cross-border, and then transferred from countries that have nothing to do with China. This application scenario has created a huge market for stablecoins. Now we are all contributing to the dollar to some extent. I hope practitioners You can think about it in this regard, and of course we need the support of our country.
Hao Fangzhou:Yang Min said:
Yang Min said:With the popularity of 1CO and the rapid development of exchanges in 2017, the demand for USDT is also increasing. The first wave of USDT user growth is indeed brought out by the currency circle. The demand for funds in and out of the currency circle has completed the cold start of USDT .
However, some changes have taken place in the market since 2018. These changes include the fact that the stablecoins mentioned by many guests have begun to slowly go out of the circle. Then DeFi became popular in the second half of 2018. The emergence of decentralized DAI led to the emergence of many emerging stablecoins. Especially after the USDC came out, the DeFi market became more interesting. Various lending agreements, trading agreements, and derivatives began to appear slowly, all of which have a certain correlation with the development of stablecoins, because stablecoins are a basic fuel, and there is no way to promote the prosperity of DeFi without stablecoins.
In fact, for us users who use stablecoins, if we do trade transfers, there is actually no difference between various stablecoins. Since this year, the growth of the main force of USDC and compliant stablecoins is actually not much. I personally think that the most important thing for stablecoins is the awareness of liquidity. New compliant stablecoins, especially It is a fiat currency-type stablecoin, which still has a very important role. It is very likely to challenge the status of USDT. It is difficult for an over-collateralized stablecoin to occupy the mainstream market. Stablecoins in the U.S. market are generally compliant. After USDT solves the compliance problem, I think it will lose most of the opportunities in the compliant institutional market. Therefore, I think there will still be great opportunities for fiat currency-based stablecoins in the future. It is also an important reason why exchanges have designed so many tools in the field of stable coins.
Mable Jiang：A very important point is that USDT is the first stable currency. Because it has existed for a long time, it can be found in any exchange in the world, and even the aforementioned non-exchange cross-border settlement deposits and withdrawals also use it . This brings a liquidity premium, and the number of people who hold it dilutes the cost of holding it to almost zero, or it is backed by liquidity around the world.
This principle actually applies to any forked currency that has existed for a long time. Those forked coins may seem worthless to many people, but because it has existed for a long time, it has become a liquidity channel, which has become part of its value.
At this stage, the challenge for other compliant stablecoins is that the RMB deposit channel is basically only USDT, and there are no other RMB deposit channels. Like PAX and TUSD, you need to have a US dollar account and you need kyc. Many people in China cannot do this, which makes tether stand still. But if, for example, Huobi OTC can connect the RMB deposit channel with their compliant HUSD in the future, then it is possible that the compliant stablecoin will gradually weaken tether as Mr. Mindao said, otherwise there will still be challenges.
Frank ling：For stablecoins, compliance is only a condition, but it is not a necessary condition, nor is it a sufficient condition. The reason why USDT’s market position cannot be shaken is because there are three main factors behind it: the first is that USDT is the first to do so and has a first-mover advantage; the second is that USDC occupies a traffic highland like Coinbase; the third is that USDT has opened To ensure the liquidity of BTC, the largest off-market trading pairs of USDT are all on BTC, which diverts the flow of BTC to itself.
Zhang Yuanjie:
Zhang Yuanjie:You have spoken very well, from the perspective of compliance and from the perspective of users. I think the demand for all products should start from the perspective of the market. Let us first talk about the first-mover advantage of USDT, and directly win the trading pairs of digital currency and RMB Yes, it was replaced by digital currency and USDT. The development of the USDT and OTC market has supported a huge application network for USDT. This application network has formed a multi-level distribution mechanism. Everyone moves bricks in it layer by layer, and there are always a bunch of Chinese people behind them to exchange RMB for them. , They don’t care about whether there are U.S. dollars, as long as USDT is exchanged for RMB, the reason for supporting this network can only be said to be the result of historical trends.
When will the compliant stablecoin surpass USDT? I think that within a limited period of time, the position of USDT is still very difficult to shake, because other stablecoins have no first-mover advantage. From this perspective, it is difficult to surpass USDT because the traffic is limited. Yes, the stablecoins that entered the market later did not exert network effects.
Hao Fangzhou:Zhang Yuanjie:
Zhang Yuanjie:There are not enough U.S. dollars behind USDT as a reserve. This is a very important problem, but this problem has become less and less important in the currency circle. If USDT cannot be exchanged for U.S. dollars, it will directly reflect the price of USDT Therefore, as long as USDT can be converted into US dollars, there will be basically no risk of thunderstorms.
I think that in the case that USDT is not enough to go out of the circle, if the three major exchanges replace all USDT trading pairs with other stablecoin trading pairs, then USDT may have problems when demand shrinks quarterly, and USDT will fall into In the death cycle, USDT may be violent in this case. So as long as the exchange does not delist USDT trading pairs, USDT will always exist. Especially when USDT is getting more and more out of the circle, USDT is used in more and more business scenarios, and even used for settlement in people's daily life. At this time, even if the three major exchanges delist USDT trading pairs, there is no way to run USDT. But at present, USDT has not achieved enough to go out of the circle, and it has not yet become so strong.
Frank ling：Because the USDT run is different from the bank run, the bank run needs to withdraw money, and the USDT run will cause the BTC to explode. The market value of BTC has soared, and everyone did not exchange for US dollars. On the one hand, the cycle is relatively long, and on the other hand, there is a 3% handling fee. When everyone panics, no one has the patience to queue up, and everyone will switch to BTC in an instant.
Second, as a result of the run, USDT's transaction share has declined or even been removed from the shelves. But everyone will think about another question at the same time. Today, when USDT occupies such a large transaction share, as long as your issuance and redemption are orderly, and your circulation price does not deviate abnormally, then everyone will be very concerned about this USDT. The degree of trust in this network increases over time. In fact, the domestic crackdown on illegal funds in the OTC field actually started in April 2019, and it was in full swing in August with the "net clearing" operation. During that time, the USDT OTC transaction volume declined very sharply, but USDT also remained In the additional issuance, we can see that USDT’s changing market has made its vitality extremely tenacious. Therefore, I personally think that unless there are some particularly extreme events or long-term competitive factors in the short term, USDT will not easily explode. Ray risky.
Hao Fangzhou:Yang Min said:
Yang Min said:If you understand the process of minting and selling coins of stable coins, you will know that this problem will definitely not exist, because stable coins originally rely on minting and selling coins and arbitrage to maintain their price anchoring.
I think the biggest challenge for stablecoin issuers in the era of negative interest rates is how to cover the costs of operators.
Stablecoins are a bit like superconductivity in physics. Stablecoins superconduct the U.S. dollar. After becoming a superconductor, the friction will be very small. After the U.S. dollar is superconducted, it can circulate in various markets. Before that, many countries Currency is replaced. I think stable currency will speed up this process. It was difficult for negative interest rates in European and American countries to be transmitted to China because of very strict capital controls.
However, the transmission of interest rates in the currency circle is very fast. Chinese miners can borrow loans with negative interest rates on the platform. The transmission of this matter has never occurred in China. So I think the existence of the stablecoin itself has accelerated the penetration of the US dollar negative interest rate market. I think this will have a great impact on the global foreign exchange market. In the past, it took a process for the foreign exchange policy of the United States to be transmitted to other countries. The stablecoin will make the interest rate of the currency Policies will be more strongly influenced by the U.S. dollar, not to mention that most countries in Asia, Africa, Latin America and Southeast Asia are replacing their currencies with the U.S. dollar, which will have a profound impact on the global economic structure.
But in the end, the strength of this impact is determined by whether stablecoins can be exported outside the currency circle, such as trade and cross-border payments. This is why everyone has such high expectations for Libra, because Libra is completely based on Internet client-side penetration. And the impact will be greater. This is my personal opinion. Negative interest rates may spread to other markets more efficiently through stablecoins.
Mable Jiang：Just now everyone was worried that the stable currency will not be able to maintain a 1:1 anchor with the US dollar in the future. I think the essence of this question is to ask whether commercial banks will transfer negative interest rates to the bank accounts of institutions or ordinary people after the central bank implements negative interest rates. I think Won't. Japan and the European Central Bank have not transmitted negative interest rates to the accounts of ordinary people, or even the bank accounts of some institutions, because holding physical banknotes will cause some runs, but it will not stimulate consumption. At this stage, commercial banks should not lower the deposit rate to zero. There are many ways for these institutions to keep the deposit rate below zero. Buying some investment-grade bonds is one way. To briefly answer this question, this is not a special thing to worry about. If the deposit interest rate of ordinary users is not allowed to be zero, there will be no such problem.
Frank ling：In the stage of negative interest rates, when we issued USDS, we isolated US dollar assets, and our stable currency redemption can be redeemed off-site and exchanged for US dollars. But the official does not do on-site or off-site redemption of US dollars. The main reason is this. In the virtual world, the currency creation path cannot be said to be linked to the US dollar in the virtual world. The real world is labor settlement. The virtual world only has computing power and BTC, and energy is Assets of the virtual world.
We issue stable coins, and the core liquidity itself is on BTC. If we peg it to the U.S. dollar and use the U.S. dollar as a stable asset, we will inevitably enter the range of the modern banking industry. As the U.S. dollar, the U.S. dollar is the biggest beneficiary of this round of virtual currency expansion, but all other countries are victims Or, the only currencies that appreciate against the U.S. dollar are the renminbi and the Japanese yen. Other countries will reject stablecoins, especially if U.S. dollar stablecoins are floating in the sky in the era of negative interest rates, which will have a great impact on the financial stability of other countries. Powerful countries do not have to worry about foreign exchange. Except for the issue of control, all other countries will worry about foreign exchange control, including our country. As long as the US dollar is actively linked, as long as the settlement is converted into US dollars, you will go to the opposite side of finance. This will immediately cause problems, because legislation must It lags behind the present, and political needs have always been ahead of legislation. Everyone needs to analyze the core demands, which is the most important thing. So as a stable currency, although it seems very simple, it is actually a very complicated matter. I am very optimistic about this market, but there will be great waves and uncertainties in the short term.
