Is Binance striving to secure the dominant position for stablecoins?

Jafar224

The total market capitalization of the top three stablecoins, USDT, USDC, and BUSD, has accumulated to $135 billion. Calculated at the current interest rate of around 4%, these stablecoin providers could generate an annual revenue of $5.4 billion. Entities associated with these stablecoins also have connections with the world's largest cryptocurrency exchanges - Bitfinex for USDT, Coinbase for USDC, and Binance for BUSD.

USDT is the oldest among them, with a market cap of approximately $10 million in January 2017. Over the next five years, USDT has grown 6,800 times, facilitating quick and convenient access to USD for cryptocurrency market participants worldwide and further solidifying the status of the USD as the world's reserve currency. USDC found its market fit through DeFi, becoming a universal USD stablecoin on all major DeFi platforms during the DeFi Summer of 2020. USDC differentiated itself by employing a branding strategy called "laddering," highlighting competitors' weaknesses in an attempt to solidify its position. Specifically, USDC achieved this by establishing a moat in terms of compliance. It promotes its headquarters in the United States, partnerships with brand collaborators (New York Mellon Bank, BlackRock), and a more transparent reserve compared to its competitors.

In 2019, the newly launched stablecoin BUSD successfully hitched a ride on Binance's success. Being the world's largest exchange, Binance employed various methods to promote the use of BUSD on its platform and on its blockchain, BNB Chain. Fast forward to 2022, BUSD has become the third-largest stablecoin, and Binance is more eager than ever to expand its dominance in the stablecoin space.

While discussions about use cases for cryptocurrencies often revolve around the promises of decentralization, the potential of Web 3.0, and a fairer internet, these are still in the developmental stage. Tangible cryptocurrency products unrelated to speculation or trading, especially those addressing real-world needs, typically take years to gain mainstream recognition. In recent years, one such clear use case for cryptocurrencies has emerged: the widespread adoption of stablecoins.

For example, a graphic designer in Brazil can now easily accept payments in USDC from her client in Finland without relying on centralized systems, paying high fees, or worrying about accessing her funds. In essence, the growth of USD stablecoins has facilitated global capital flow, fostering the development of a digital-first economy.

In this article, we discuss Binance's recent strategic moves regarding BUSD conversion and elaborate on why, despite recent regulatory challenges, innovative stablecoin designs will continue to be a crucial area for DeFi in the coming years. Binance, often referred to as the "giant" of cryptocurrency, is the world's largest exchange. Founded in 2017, the company recently celebrated its 5th anniversary in July. It's undeniable that Binance is one of the greatest companies built in the past five years. While Silicon Valley tech brethren chase after Uber, BNPL, and the next 15 minutes of rapid business to enhance their returns, some of the most profitable companies built in recent years slipped away from under their noses in the crypto space.

Isha000

It's worth taking a look at this position.

Iravan774

Binance has always been in a dominant position, hasn't it?

Kahn332

The position of a coin is determined by the market, and a company doesn't have control over it, right?

Kalkin995

Wasn't Binance fined by the United States recently?