Will the USDT market cap exceed Bitcoin? Stablecoin has become a strategic highland of blockchain

1. Will the market value of USDT exceed Bitcoin?

There was a news about USDT in the market a few days ago:

Since March 9th, USDT has issued 14 consecutive transactions, and the additional USDT is worth about USD 600 million. Among them, three additional issues were issued on March 18, valued at about $ 125.6 million. On March 13, the market value of USDT was close to $ 5 billion.

This news did not cause much reaction in the market and may be ignored by everyone. Over the years, we have been accustomed to issuing additional USDTs. Anyway, there are such additional news breaking out every three to five. Many of us even hope that more USDTs will be issued, because it always feels good that USDT flows into the market. There can be more buying in the market. Disk, can promote the price of digital assets.

In the last round of bull market, the market value of USDT was ranked 10th in the digital currency market capitalization list. However, according to the latest data, USDT has become the 4th currency with the market value of digital currency, and USDT will continue to issue additional funds in the future. The market value of USDT will continue to expand, and its ranking may also continue to advance, such as third and second.

If this trend develops, maybe the market value of USDT will surpass Bitcoin one day. At that time, I don't know how everyone will look at this situation. Will it be regarded as a big mockery of the digital currency industry? The market value of USDT exceeds Bitcoin, which sounds incredible, but it seems that the possibility cannot be ruled out. After all, the market value of Bitcoin is uncertain, but the market value of USDT is steadily and rapidly rising with the naked eye. .

Second, stablecoins are strategic highlands

Although everyone is talking about stablecoins every day, I think the importance of stablecoins is still underestimated by everyone. A sentence may seem a bit exaggerated, but the longer it is, the more obvious it is:

In addition to Bitcoin, stablecoins are another very important strategic high ground for digital currencies.

The role of stablecoin is not only to solve problems such as the OTC deposit channel of digital assets, it should even be said that it is not a simple digital currency. The stablecoin is at the core of the entire financial system: it is connected to traditional finance at one end, to digital assets at one end, to assets at one end, to payment at one end, to the chain on one end, and to the off-chain at one end.

For example, when used for payment, the volatility of general digital currencies (such as BTC) is too high, which is not in line with people's consumption habits, and there are often other problems in the actual consumption process, but it is easy to pay with stable currency More, it is not necessary to change people's payment habits; for example, when you use general digital currency, your more application scenarios are online, offline parts are not suitable for legal reasons, but the use of stable currency This problem is relatively easy to solve; for example, if you use general digital currencies and want to enter the traditional financial market, it is very difficult, but use a stablecoin, if the consensus of this stablecoin is large enough, you want to make It is much easier to accept it in the traditional financial world.

Moreover, as far as native digital currencies are concerned, stablecoins are not just stablecoins themselves. There is also an infinite DEFI financial market behind them. Only the stablecoin itself is easy to use, has the broadest consensus, and there is nothing wrong with security and efficiency. The degree of decentralization is also strong enough. After these solid foundations, DEFI finance can develop. This is an important point. :

The development of DEFI finance needs to be based on a solid stablecoin.

Third, the current stable currency is far from stable

In the current market, despite the endless stream of various stablecoins, USDT has taken the absolute leading position as a whole.

The market has a lot of doubts about USDT, thinking that its centralization problem is too serious, that its finances are not open and transparent, that it does not accept third-party audits, and is not a 100% security deposit. There is an unlimited possibility of overpayment. Although there is currently no evidence to prove this, I have always been willing to think about things as bad. If there is room for evil in one thing, then someone must be evil, after all, facing huge profits.

If it is really okay, it is entirely acceptable to monitor the market to dispel market doubts. But it didn't do it, so we have reason to doubt it, and we need to prepare for extreme situations. Because it is too important, if the USDT really explodes one day, the entire market will be significantly affected, and the more the market drags on, the greater the USDT market value, the more profound the impact of this thunderstorm, or even Many big Vs believe that the USDT explosion is sooner or later.

In fact, it is quite ironic. Someone joked:

Originally thought that the digital currency represented by bitcoin could solve the problem of unlimited oversupply and inflation of the currency, but as a result, I did not expect to encounter a digital currency such as USDT.

4. Several stablecoins on the market

At present, in addition to USDT, there are other stablecoins that can be roughly divided into the following three categories: anchored, mortgaged, and algorithmic.

The representative of the anchor class is USDT. We have already talked about it before. After the coming of the Central Bank's DECP, it can be roughly divided into this category because it is also purely centralized. In the future, central banks of all countries will issue a digital currency that is purely centralized. It still faces a problem. It needs to be subject to capital controls. Various restrictions on currency in real life are also suitable for central bank digital currencies. The native assets of the blockchain are generally directly facing the world, so even after the Central Bank's DECP comes out, there will still be a living space for the blockchain's native stablecoins.

For mortgage-like stablecoins, such as the well-known Bitcny. The advantages of this type of stablecoin are decentralization, openness, transparency, and credibility. It can be generated entirely based on native financial assets. It does not rely on the traditional currency of a certain country, because it cannot be banned, and it has a more blockchain feel. However, its shortcoming is that the volatility is very high. When the price fluctuates sharply, it is easy to have serial bursts. This is related to its collateral mechanism, and to the volatility of its underlying mortgage assets.

The mortgage mechanism can be adjusted, for example, the mortgage rate can be reduced as much as possible, but the risk cannot be eradicated, and the volatility of its underlying assets will always exist, which is the root cause of its risk. How to hedge its tail risks through various financial means and how to set up sufficient risk reserves to deal with extreme situations is very important. In popular terms, whether it can withstand the critical time is the core of measuring whether a mortgage stable coin can be used or not . If it can withstand that the risk control methods behind this stablecoin can effectively deal with the risks of extreme situations, then this type of stablecoin will have a very competitive advantage in the market. If it can't withstand critical times, then one or two extreme situations will happen, and this stablecoin may be abandoned by the market.

Algorithmic stablecoins mainly pursue the issuance of unsecured stablecoins, generally simulating the open market operation of the central bank. The approximate operation is: increase the supply when the price of stablecoins is higher than 1 dollar; when the price of stablecoins is lower than 1 dollar , Recycling supply. At present, algorithmic stablecoins have a relatively low market share and have a relatively small influence. Algorithmic stablecoins have some natural problems, that is, the scenes in the real world are complex and changeable, and it is difficult to perfectly correspond to each scene of real life, far from being a simple algorithm to match.

As Mr. Pan Chao said in "Algorithmic Stable Coin" is a pseudo-proposition: formulating an economy's monetary policy is no less than driving a high-speed car on intricate terrain, even if equipped with the most advanced The autonomous driving system also requires human and police involvement when the machine is stupid. And blindly emphasizing a magical stable currency algorithm on the blockchain with incomplete infrastructure and lack of identity data is tantamount to training an autonomous car model in Excel, which is far from enough. Although the current algorithmic stablecoin has a small influence, it does not rule out that there will be better algorithms to solve the problem of stablecoins in the future. How the specific effect remains to be seen.

V. Conclusion

Stablecoins are a very important battlefield and are of strategic significance. The importance of stablecoins can be compared with bitcoin. It can affect the international political and economic landscape, it can affect the entire blockchain financial ecology, and it can affect the entire DEFI ecosystem behind it.

On the one hand, the status of stablecoins is so important, while on the other hand, the currently dominant market share is USDT, which is widely questioned by the market. Although there are many types of stablecoins, their competitiveness is limited. Reaching stability, there will be earth-shaking changes in the future. The market needs a truly "stable" stablecoin, a reassuring stablecoin, a decentralized stablecoin, and a stablecoin that will not be issued indefinitely.

Stablecoin is a pillar-level application of the blockchain. Both the government level and the private level need to make efforts in this area as soon as possible to seize the opportunity.

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