USDT surpasses $10 billion

Yesterday the USDT monetary base surpassed $10 billion. USDT joins Bitcoin and Ethereum as the only 3 cryptoassets with a market capitalization in the 10 figure range.

Source: Messari Portal

Why it matters:
USDT continues to grow its lead on its stablecoin competitors, and is still the only stablecoin with a market capitalization greater than $1 billion.
The $10 billion mark is not fundamentally significant, but it is a sign of USDT’s staying power despite all its controversy over the years.

Smart contract platform Celo unlocks transfers for its stablecoin, Celo Dollar

Yesterday, Celo’s on-chain governance system activated the network’s Stability Protocol, thus unlocking the ability to create and transfer Celo Dollars (cUSD). In addition to being a general-purpose development platform, Celo features a reserve contract that allows users to post CELO (Celo’s native asset) as collateral in exchange for the dollar-pegged cUSD. This MakerDAO-esque system also supports reserve assets other than CELO, including BTC, ETH, and DAI, to help maintain the cUSD peg. In the long run, the Stability Protocol can add support for off-chain reserve assets, as well as issue other crypto-collateralized stablecoins if approved by a community vote.

Why it matters:
In a crowded smart contract platform market, recently launched projects are looking for an edge or a way to differentiate what their platform can offer users or developers. A native, stablecoin-generating stability mechanism might give Celo a leg-up relative to other platforms as most are still searching for developers to build a similar system.

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Stablecoins continue to rise in popularity. The overall stablecoin market capitalization has more than doubled YTD to meet the growing demand for stable transfer value. Celo Dollar could help drive early Celo network adoption should some of these demand spill over into new platforms. But in terms of popularity, decentralized stability mechanisms like DAI still trail fiat-collateralized stablecoins like Tether and the fast-growing USDC.

What are stablecoins actually used for?

In a post today Flipside Crypto provided new data visualizations on Tether’s use on the Ethereum blockchain. Looking at USDT’s active supply, defined as USDT having been transferred in the last 30 days, Flipside found a couple of revealing insights.

The data shows that most USDT is used on centralized exchanges for arbitrage – profiting from price differences across exchanges. The way this is done in practice is that arbitrageurs first send USDT to their own wallet before sending to a different exchange. This is done to gain more control over and achieve lower transaction fees on USDT transfers between exchanges. Most of this activity takes place between Huobi, Binance, and Bitfinex.

The data also highlights the flow of USDT from issuance to end use. All new USDT is first minted, then sent to Bitfinex, who controls the keys to the printer, before being transferred to other exchanges. In USDT’s entire existence on Ethereum Tether has never burned any supply.

Why it matters:
USDT is by far the most dominant medium of exchange on Ethereum. Although it’s commonly understood that most USDT is being used to move value between exchanges, it’s revealing to have data that confirms this.
The data also suggests that much of the USDT supply is not active. There’s is over 7 billion USDT on Ethereum, yet only ~2 billion are considered active.

Binance to integrate BUSD stablecoin on the Elrond Network

Binance has announced plans to integrate its BUSD stablecoin with the Elrond Network once it goes live. The crypto exchange is looking to expand the number of BUSD holders and application listings by turning to networks beyond Binance Chain and Ethereum.

Why it matters:
Binance is strategically targeting a new network so that BUSD can become the dominant stablecoin by default. Success, in this case, is entirely dependent on the ability of Elrond to attract developers and grow its application ecosystem, which is a difficult task within a highly competitive smart contract market.
For Elrond, the integration makes sense from an adoption perspective. Users have shown an affinity for price-stable assets, as indicated by the recent explosion in the issuance of stablecoins. Thus new smart contract platforms like Elrond need a stablecoin offering to attract and retain users. Other emerging networks have made similar moves as of late, including Solana (partnership with Terra) and Algorand (integration with Tether).

dYdX launches decentralized perpetual swaps for bitcoin

dYdX, a margin trading platform for Etherum, announced they are launching a market for perpetual contracts offering up to 10x leverage on bitcoin. The contracts will utilize a similar funding mechanism to centralized exchanges where longs and shorts pay each other based on existing interest. A key difference is that liquidations will occur on-chain rather than through a centralized entity, a mechanism that has been plagued with issues in the past.

Why it matters
Popularized by BitMex, the “perp” has become the most liquid market in all of crypto trading billions of dollars every day, however, there is no way to trade this contract in a decentralized manner. By automating this market through smart contracts, it should become more transparent and trustworthy.
DeFi applications have mostly centered around trading or lending Ethereum and ERC-20 tokens while financial applications using bitcoin have remained on centralized exchanges. By offering a product geared towards those looking for bitcoin exposure, dYdX could onboard a new set of users into DeFi.

Introducing Heartwood, the next major Zcash upgrade

Today the Electric Coin Company released a blog detailing Heartwood, the next major Zcash network upgrade. Heartwood will improve interoperability through Flyclient support and give miners the option to immediately shield mining rewards in coinbase transactions.

Flyclient, known as ZIP 211, will enable interoperability efforts, cross-chain integration, and light-client use cases. The ZIP could pave the way for Zcash SPV proofs to be verified in blockchains such as Ethereum, enabling efficient cross-chain communication and pegs.

Shielded Coinbase, known as ZIP 213, will modify Zcash consensus rules to enable coinbase funds to be mined to shielded Sapling addresses. Prior to the Sapling upgrade, a shielded coinbase was not feasible because shielded transactions required significant memory and CPU resources to create.

The feature selection for this upgrade was determined in the community forum in June 2019, and the block height for Heartwood will be announced in Q2.

Why it matters:
With a regular upgrade schedule, Zcash not only aids it’s community’s preparedness for network upgrades, but also allows for continuous improvement of its nascent protocol.
With its next two upgrades called for, the Zcash community has roadmap clarity throughout 2020.