When the BUSD flag falls, what will happen to BNBChain’s stablecoin ecology?

特邀专栏作者

2023-02-17 03:55

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How will the exit of BUSD disturb BNBChain's stablecoin ecology?

Original author: GaryMa Wu said blockchain

Recently, Wu said that he publishedBUSD Under Regulatory AssaultA review of the entire process, the US Securities and Exchange Commission SEC sued Paxos for BUSD as an entry point for unregistered securities, and then the New York State Department of Financial Services NYDFS instructed Paxos to stop minting new BUSD, and CZ also stated that "the product will be adjusted accordingly. For example , no longer use BUSD as the main currency pair for transactions”.

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BNBChain's Stablecoin Ecological Status

According to statistics from defillama, the total market value of the stablecoin ecosystem on BNBChain has exceeded 9 billion US dollars, of which BUSD has a market share of as high as 53% and a market value of about 4.8 billion US dollars.

This is followed by USDT with a market value of approximately US$3.2 billion (35%), USDC with a market value of approximately US$780 million (8.67%), and some stablecoins with a market value of less than US$100 million, such as USDD\Dai\HAY, etc.

According to Paxos, BUSD will still be redeemable until at least February 2024. Although there is a buffer period of at least one year, in the face of the outflow of billions of dollars of stablecoins, the question before us is, how will this disturb the stablecoin ecology of BNBChain?

Is it to stimulate the development of decentralized stable currency?
Or strengthen the dominant position of USDT/USDC in BNBChain?

Regarding the former, when faced with the proposal to let Binance build a decentralized stablecoin similar to DAI, CZ has already responded that at this juncture, we hope that others will do it to make it more decentralized. We can't do everything.

Looking back at the current two BNBChain players, HAY & VAI, the current market value of their stablecoins is only tens of millions. Even if we optimistically imagine that such projects can carry the banner, it seems that their own track has an upper limit, and the development is as good as DAI on Ethereum currently has a stablecoin market value of only about 5 billion U.S. dollars. Converted to BNBChain, it is still not comparable to the scale of centralized stablecoins such as BUSD.

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Binance-Peg Token，BToken

Since most users only need to pay attention to the application experience level, they do not have a deep understanding of the specific underlying attributes of various assets. In fact, in the early days of BNBChain (originally named BSC), in order to attract external high-quality assets such as BTC\ETH and stable coins, Binance launched the Token Canal (Token Canal) plan, which is similar in essence to Wrapped Assets. Binance officially acts as the processing center for the custody of native assets and the issuance and redemption of encapsulated assets.

Later, with the diversification of assets introduced and the expansion of scale, Binance officially referred to these tokens as Binance-Peg Token, BToken.

According to Binance’s official BToken mortgage reserve certificate, we know that there are currently 97 BTokens, including about 5.4 billion ERC 20 BUSD reserves, corresponding to about 4.8 billion BEP 20 BUSD and BUSD corresponding to other chains.

Previously, NYDFS emphasized that it authorized Paxos to issue BUSD on the Ethereum blockchain, but the department has not authorized Binance-Peg BUSD on any blockchain. It seems that the real motivation of NYDFS is actually Binance Pegged BUSD, rather than worrying about whether there is 100% reserve support. After all, this block of Binance has open and transparent reserve certificates that can be verified, and Binance Pegged BUSD, a packaged asset, strictly speaking belongs to Binance’s behavior on the chain, so should NYDFS/SEC point the finger at Binance, and USDT\USDC also has a corresponding Binance Pegged, will Tether\Circle also passively have the same problem? Or is it just an excuse, and the essence is just a targeting? Of course, even if it is a kind of targeting, it may have something to do with the initiative to automatically convert USDC, USDP, and TUSD to BUSD by default. After all, with the support of Binance, more scenarios of BUSD may be biased towards BNBChain will give people a misunderstanding that Binance Pegged BUSD is the original asset.

Now let’s go back to the original question “How will the exit of BUSD disturb BNBChain’s stablecoin ecology”, the answer seems to be relatively clear. It will give a certain boost to the decentralized stablecoin track, but the height of the waves that may be stirred up is limited ;The high probability is that Binance Pegged USDT\USDC share the demand for these stablecoins. At the same time, the gradual withdrawal of BUSD may also be bad for the BNBChain ecology. As for whether Binance Pegged USDT\USDC will be subject to the same regulatory restrictions on "issuance" authorization, such concerns can be put aside for the time being. Although Binance does not have a compliant custody license like WBTC's custodian BitGo, its asset custody reserves It is open and transparent, and supervision should not be so destructive.