Key Takeaways
- The rapid ascent of the Binance stablecoin BUSD has sparked speculation.
- The CEO of FTX, Sam Bankman-Fried (SBF), predicted that there would be a second great stablecoin war due to the recent rapid increase in the BUSD market value.
The rapid ascent of the Binance stablecoin BUSD has sparked speculation. The CEO of FTX, Sam Bankman-Fried (SBF), predicted that there would be a second great stablecoin war due to the recent rapid increase in the BUSD market value. Sam's most recent remark came a month after Binance launched its project. The auto-conversion of several stablecoins supported by its exchange into BUSD on September 6th resulted in a quick spike in the market value of BUSD ever since.
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A stablecoin's rise in market share has ignited the ‘Second Great Stablecoin War’
Statistics and data were gathered from the cryptocurrency data aggregator Coin Metrics. From September 7th to October 22nd, the BUSD share increased from a market cap of 10.01% to a whopping 15.48%. In the last 30 days, statistics show that the BUSD's market value has grown an additional 3.3%, which is equivalent to $21.7 billion, Tether USD(USDT) at $68.4 billion, and USD coin(USDC) at $43.9 billion.
Reflecting on the asset's increase in the aftermath of the shift, the FTX CEO tweeted on Oct. 23 that "Binance changes USDC to BUSD, and we witness the shift in supply," adding that "so starts the second great stablecoin war."
Sam stated that the stablecoins war happened in 2018 between 5 stablecoins with USDT and USDC coming out of it as the two behemoths. Even if its market share has decreased from 88% since the year 2020 to around 48% currently, USDT is still regarded as the top stablecoin in the industry. Data indicates that throughout the same period, USDC's market share rose dramatically from 10% to 32%.
According to SBF, more initiatives will be emerging in the "non-fiat-backed-stablecoin arena" as BUSD continues to make inroads into the marketplace and the major centralized competitors compete for control. It will be fascinating to witness what the post-Luna and post-DAI-holding-USDC bring to the table. My prediction is that it's going to be something that has some potential and pays dividends," he continued.
Binance stated that it would stop offering a variety of spot trading asset pairs for USDC, USDP Stablecoin, and TrueUSD in September and advised users or holders to make sure their stablecoins automatically convert to BUSD in a 1:1 ratio.
According to Binance, the action was taken to improve user access to funds and liquidity. Binance announced at the period that there were imminent intentions to use the same strategy to USDT, but added that this "might turn."
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