As the crypto industry accelerates into 2025, Web3 innovations are at the forefront, promising to reshape how we interact with technology, finance, and governance. With its market share growing, Web3 is expected to establish groundbreaking trends that will shape its future trajectory. Here are nine transformative predictions:

1. Chain Abstraction Will Simplify Web3 Adoption

Interoperability will eliminate the complexities of using multiple blockchains, creating seamless user experiences. This simplification is expected to bring Web3 technologies to mainstream markets by removing barriers to entry.

---

2. DeFi Meets Traditional Finance

The fusion of decentralized finance (DeFi) with traditional financial institutions is set to redefine lending, borrowing, and staking. This integration will blur the lines between TradFi and DeFi, enabling secure, transparent, and accessible financial interactions.

---

3. Stablecoins Dominate Transactions

#Stablecoins are positioned to outpace other blockchain products, becoming the backbone of Web3 transactions. Their low volatility and utility in remittances, cross-border payments, and everyday use make them a cornerstone of the decentralized economy.

---

4. Tokenization Unlocks Real-World Assets

The tokenization of assets like real estate, fine art, and commodities will democratize access to high-value investments. This trend is expected to inject liquidity into traditionally illiquid markets, driving investor participation and innovation.

---

5. GameFi Goes Mainstream

Blockchain gaming is evolving beyond niche markets. Features like true ownership of in-game assets and play-to-earn models are attracting major gaming studios. As GameFi grows, it is expected to merge entertainment with financial opportunities, expanding its user base significantly.

---

6. DAOs Redefine Organizational Governance

Decentralized Autonomous Organizations (#DAOs ) are emerging as a preferred governance model for private enterprises and NGOs. DAOs offer transparency, collective decision-making, and minimal hierarchy, empowering stakeholders to drive organizational activities.

---

7. Engagement-Based Rewards Replace Airdrop Farming

Airdrop farming is giving way to engagement-driven incentives. Tiered participation, milestone-based rewards, and reputation systems are expected to strengthen communities and promote long-term project commitment.

---

8. Regulatory Clarity Will Drive Growth

Governments worldwide are recognizing the need for clear crypto regulations. Pro-innovation frameworks will attract retail and institutional investors, ensuring a balance between growth and investor protection.

---

9. Meme Coin Market Faces a Shakeout

The #memecoin frenzy will undergo significant corrections, leaving only projects with strong communities and unique use cases standing. Surviving tokens will solidify their place in future market cycles.

---

Conclusion

#Web3 is poised to revolutionize the digital landscape just as the internet did decades ago. While these predictions highlight exciting trends, the true potential of Web3 lies in user-driven innovation and adoption.

As 2025 approaches, the world watches as Web3 matures into a pivotal force shaping the future of technology and finance.

As of now, the cryptocurrency market is witnessing a remarkable surge, with #Bitcoin achieving an all-time high of just above $80,000, signaling a robust bull market. Bull markets like this one bring a wave of optimism, increased capital inflow and new retail and institutional investors eager to capitalize on the upside potential of digital assets. A bull run can be incredibly rewarding but it’s also crucial to recognize that these phases are cyclical. What follows the excitement and profit of a bull market is often a period of correction sometimes severe known as a bear market.
In this article, we’ll discuss the current bull market, its potential advantages, and eventually transition into understanding the possible triggers and timeline for the next bear market. Additionally, we’ll explore strategies to handle the psychological and financial aspects of both market phases, preparing investors for what lies beyond the peak.
The Benefits of the Current Bull Market

1. Increased Institutional and Retail Investment: The current bull market is seeing unprecedented participation from both retail investors and institutional players, drawn to Bitcoin and other cryptocurrencies by their potential as inflation hedges, sources of portfolio diversification and growth assets. Institutional involvement often brings market stability as their presence lends a certain legitimacy and encourages more conservative, long-term investment strategies.
2. Innovation and Adoption Growth: Bull markets provide capital that accelerates innovation and adoption. Projects around decentralized finance (#DeFi ), non-fungible tokens (#NFTs ) and layer-2 solutions ( Arbitrum, Scroll, Sonic, Polygon, Base among others) are witnessing strong support and further development. This growth cycle builds the underlying ecosystem’s strength, leading to more sustainable and diversified offerings in the crypto space.
3. Mainstream Integration: Major payment platforms, such as PayPal and Visa are actively integrating cryptocurrency solutions, allowing more users to engage with digital assets. This increase in mainstream exposure has bolstered public confidence in crypto as a viable asset class and broadened the market base.
4. Wealth Generation: Many investors use bull markets to generate significant returns, providing financial freedom and opportunities for wealth generation. The possibility of high returns is particularly enticing for retail investors looking for new ways to grow their portfolios amid uncertain economic conditions.
5.The Political Impact: A New Era of Pro-Bitcoin Leadership
The rapid ascent of Bitcoin has also been influenced by a shift in the U.S. political landscape. With the re-election of former President Donald Trump who has expressed his pro-Bitcoin stance (could be for political strategy to woo the crypto boys) and a substantial increase in pro-crypto congressional candidates 250 in total, according to Fox Business, there is a new level of support for cryptocurrency at the highest levels of government. This favorable political climate is expected to probably reduce regulatory obstacles and foster innovation, creating a supportive environment that has amplified Bitcoin’s current bull market.

Recognizing the Transition to a Bear Market

Despite the excitement of the current bull market, history shows that it will eventually cycle into a bear phase. Predicting the precise end of a bull market is challenging but certain signs can indicate a reversal is on the horizon. Analysts typically consider several key indicators when estimating when a bull market might end and when a bear market could start:
- Bitcoin Halving Cycles: Historically, Bitcoin's four-year halving cycle has influenced price trends. Following each halving event (most recently in 2024), the reduced supply drives price up often culminating in a bull market. However, within 12 to 18 months post-halving, bear markets have historically set in as price growth stabilizes.
- Over-leveraged Markets: During bull markets, leverage in decentralized finance (DeFi) and centralized exchanges can create vulnerabilities. When market sentiment shifts, over-leveraged positions are at risk of liquidation, leading to a cascade of sell-offs and price declines.
- Macro-economic Factors: If economic conditions deteriorate due to high inflation, interest rate hikes or recession fears, demand for high-risk assets like cryptocurrencies tends to wane. A global economic downturn could act as a catalyst for the next crypto bear market as investors seek safer assets.
- Regulatory News: Negative regulatory actions, such as stricter rules on DeFi, #Stablecoins or centralized exchanges can trigger market declines. This may happen if for instance, the U.S. SEC backtracks on Bitcoin ETFs or enforces stringent rules on stablecoin reserves leading to reduced liquidity and lower investor confidence.
Preparing Psychologically and Financially for Market Cycles
Riding the high of a bull market can be exhilarating but it’s essential to prepare both financially and psychologically for eventual downturns. Here are some strategies to navigate the current bull market and prepare for what’s next:
Psychological Preparation
1. Set Realistic Expectations: It’s easy to be swept up by the excitement of a bull run but maintaining realistic expectations about returns can help prevent over-investing or staying in the market too long. Historically, crypto markets experience significant corrections and understanding this can help investors avoid irrational exuberance.
2. Avoid Emotional Investing: Fear of missing out (#FOMO ) can lead to poor decision-making, like buying assets at peak prices. Sticking to a pre-defined investment strategy whether that’s dollar-cost averaging (DCA) or having a target profit-taking point can help counteract impulsive actions driven by market hype.
3. Focus on Learning: Bull markets are an excellent time to learn about market dynamics, technology and trading strategies. Building knowledge now will help you make informed decisions when market sentiment inevitably shifts.
Financial Strategies
1. Profit-Taking Strategy: Setting aside profits during a bull market can create a cushion for when prices eventually decline. Consider selling small portions of your holdings at specific milestones or price levels to secure gains without missing out on further upside.
2. Diversify Holdings: Avoid putting all investments in one asset. While Bitcoin and Ethereum are market leaders, exploring other sectors like DeFi or layer-2 solutions, can help balance a portfolio. Diversification also includes traditional assets such as stocks or bonds to reduce risk exposure to crypto’s volatility.
3. Reduce Exposure Gradually: As indicators of a bear market approach, consider reducing your exposure to high-risk, speculative assets, especially those with less liquidity. Many investors make the mistake of holding onto high-volatility assets during downturns which can lead to steep losses.
Dos and Don’ts as the Market Evolves
- Do Establish Stop-Losses: Setting stop-loss orders can limit downside risk in the event of a rapid market downturn. This can be especially helpful in protecting gains accrued during a bull market.

- Do Follow the News: Staying informed about regulatory developments, major exchange news and global economic conditions will help you anticipate market shifts. Knowledge is a powerful tool in managing risk effectively.
- Don’t Rely Solely on Leverage: While leverage can amplify gains during a bull market, it can also lead to catastrophic losses during downturns. Limiting leverage or avoiding it altogether during volatile periods can help safeguard capital.
- Don’t Fall for “This Time is Different” Thinking: Crypto markets have a tendency to repeat cycles. Avoiding the mindset that "this bull market is different" can prevent costly decisions such as holding onto assets too long based on unrealistic expectations of perpetual growth.
Anticipating the Next Bear Market: What to Expect
While the current bull market is in full swing, many analysts expect a bear market to emerge in late 2025 or early 2026. At that point, economic conditions, regulatory actions and potential overvaluation could combine to shift sentiment. Signs of bear markets include sharp price declines, lower trading volumes and fewer retail investors entering the market.
For investors who have made substantial gains during the bull market, the goal should be capital preservation. Holding cash or stable assets, diversifying into less volatile sectors and resisting the urge to "buy the dip" without due diligence can be effective strategies to weather the downturn.
Final Thoughts
Navigating the bull market while preparing for the next bear phase is a balancing act that requires discipline, knowledge and a sound strategy. The allure of rapid gains can lead investors to take on excessive risk but history reminds us that crypto markets are cyclical and often corrected by prolonged bear markets. By setting realistic expectations, diversifying holdings and employing risk-management strategies, investors can maximize gains in the current bull market while protecting their portfolios against the eventual bear market. In doing so, they can build resilience for the inevitable downturn and capitalize on future opportunities when the market eventually recovers.

The #Aptos blockchain continues to gain momentum, especially after a recent event: Tether launched its USDT stablecoin on the platform, making direct deposits much easier for users of the blockchain. According to researchers at TK Research, this could play a key role in the dailty development of the project and the decentralized finance (DeFI) sector within the network.

The researchers noted that since the addition of USDT, the total supply of #Stablecoins on Aptos has grown by 15.2% in the last week alone and by 9.4% in the last month, exceeding $800 million. This underscores the blockchain's growing appeal to users working with stablecoins.

$USDC
currently accounts for 51.4% of the network, while USDT and USDT (native) hold 37.2% and 3.7% respectively. The researchers also noted the presence of USDY (3%), MOD (2.7%) and USDCET (2%), which round out the list. Notably, most of the stablecoins are concentrated in leading lending and borrowing protocols such as Aries Markets (49.7%) and Echelon Market (14.2%). At the same time, Meso Finance accounts for only 9.2% of the total share

These figures show the rapid growth of interest in Aptos and the successful strategy of stackablecoin integration. Activity on the platform is expanding: Superposition Finance, Joule Finance and Aptin Labs are also showing steady asset growth, which strengthens the ecosystem. For example, Superposition increased its blocked asset amounts (TVL) by 16% in 7 days, Joule Finance by 11.7%, and Aptin Finance by 5%.

Overall, Aptos is laying the groundwork for a vibrant and sustainable stablecoin ecosystem by incentivizing the flow of new users and capital into blockchain protocols. If the trend continues, this could lead to further growth and diversification of network usage, strengthening Aptos' position in the DeFi market.
#MicrosoftBitcoinRejection

Cryptocurrency exchanges Binance, Coinbase and other trading platforms noted record inflows of #Stablecoins of the #ERC-20 standard of the Ethereum network after the announcement of the results of the U.S. presidential election. In total, the volume of deposits amounted to $9.3 billion, which was the 2nd largest inflow in history. Thus Binance received $4.3 billion, and Coinbase - $3.4 billion, the rest was distributed among other large centralized platforms.

Analysts attribute such massive infusions to potential uptrends. Previously, between September 2020 and February 2021, large inflows were accompanied by significant price rallies. If the current inflows trigger a similar reaction, the market could enter a new growth phase.

The arrival of large volumes of stable coins is often perceived as a preparation for cryptocurrency purchases. Such actions strengthen market participants' expectations about upcoming price movements. In conditions of growing liquidity, the behavior of institutional investors, for whom stability and risk minimization are important, also attracts attention.

Taking into account the previous data, CryptoQuant experts do not rule out a potential growth in the capitalization of the global cryptocurrency market. However, uncertainties remain: macroeconomic factors and possible regulatory changes may affect the development of events. Trading participants are closely watching the actions of major players, as their decisions may predetermine the movement of quotes in the coming months.

While enthusiasts are waiting for the next bullish trend, skeptics remind about the risks of overheating. All eyes are now on the rate dynamics of the leading cryptocurrencies, as well as on how exchanges will cope with this massive influx.
#BIOProtocol

Big news from Tether! 📈 Tether has announced a record-breaking $2.5 billion in net profits for Q3 2024! This highlights the growing demand for stablecoins 🪙 and Tether’s dominant role in the market, especially during times when other cryptocurrencies are facing high volatility.

Why It Matters:

🔹 Stablecoin Growth: With crypto volatility in play, stablecoins are becoming a go-to for investors seeking stability.

🔹 Market Confidence: Tether's performance showcases strong trust and reliance from the crypto community.

🔹 Future Outlook: This profit boom could shape the path forward for more stablecoin adoption worldwide 🌐.

📢 What’s Your Take?
Will stablecoins continue to thrive as a safe haven in crypto? Share your thoughts below and let’s discuss! 👇

#Tether #CryptoNews #Stablecoins #CryptoMarket #Q3Profits
$USDC
$FDUSD
$ETH

According to the latest report provided by Six Degree, an on-chain data analysis company, the recent crypto market rally has not been supported by a significant influx of capital into the sector, as the supply of stablecoins on the Ethereum blockchain has decreased compared to 2022.

To tell the truth, the total supply of stablecoins has decreased in recent years, with the only exception being the Tron network, which has seen an increase in this metric.

BUSD and USDC have been the most affected assets by this downward trend, while USDT has strengthened its dominance in the market by increasing its capitalization.

What does all this mean for the crypto market? Should we expect a growth of the stablecoin market on the Ethereum blockchain before witnessing the true cryptocurrency bull run?

Let’s see all the details below.

The latest report from Six Degree highlights a significant drop in the supply of stablecoins on the Ethereum blockchain from 2022 to date

According to the latest report from the on-chain analysis company Six Degree, the supply of stablecoins on the Ethereum blockchain has decreased by over 35% since reaching its peak in March 2022.

In that period, the total supply of fiat-backed stable cryptographic coins on the chain had a value of 108 billion dollars compared to the current 67.5 billion dollars.

The entire bear market of 2022 was driven by a redemption of these cryptographic assets that were moved from Ethereum to fiat currencies, in a continuous downward trend.
Only at the end of September/beginning of October 2023 did things start to take a different turn, with the total supply of stablecoins on the blockchain starting to grow again but at a very slow pace.

This trend has not only affected Ethereum but all decentralized networks that support stablecoins, with the only exceptional case represented by Tron which has seen the aforementioned metric increase by 57% from 2022 to date.

Looking more closely at the composition of the Ethereum stable market, we can see that almost half of these tokens are held in so-called “external owned accounts” (EOA), which are addresses of private users.

A good 30% is managed by centralized exchanges which represent the main trading platforms for exchanges between stablecoins and bitcoin.

Following are other entities that own a significant portion of stable on Ethereum: Bridge, DeFi protocols, and multisignature wallets (which usually represent the wallets of crypto project teams).

It is very interesting to note how the Six Degree report relates the trend of stablecoin supply on Ethereum with the price performance of Bitcoin in recent years.

In particular, the focus of attention is on the fact that during the last bull market of 2021, the price growth of Bitcoin was accompanied by an increase in the presence of stablecoins in DeFi on the blockchain in question.

At the same time, the bearish market that started in 2022 saw a strong contraction of these coins in DeFi, which shortly after reached one of the lowest values in recent years.
The relationship was only recently interrupted with the latest crypto market rally, in which there was no longer the same interdependence between stablecoins in DeFi on Ethereum.

This is a positive signal for ETH and for the market as a whole: when the stable sector sees a return to the all-time highs of 2022, we can expect a very strong price pump for the major crypto assets.

Tether (USDT) supply growing at the expense of USDC and BUSD

Trying to observe the situation more closely, without focusing exclusively on the Ethereum blockchain stablecoin market, let’s see which coins have contributed the most to the contraction of 2022 just described in the previous paragraph.

It is immediately noticeable that Tether (USDT), after experiencing a slight decrease in its total supply in mid-2022, immediately recovered all the lost ground, even reaching historical highs in terms of market capitalization for stablecoins.

Paolo Ardoino’s currency is therefore the only exception to this trend.

The largest growth has been in the Tron network, which currently has 48.8 billion USDT, while on Ethereum the currency has barely managed to recover the 2022 highs at 41 billion USDT.

Other blockchains like BSC, Arbitrum, Solana, etc., capitalize on a small percentage of the total supply of crypto held by Tether.

On the opposite side, we can clearly see that USDC represents one of the main contributors to the decrease in the total supply of stablecoins on Ethereum.

On this chain, in fact, the currency still has a deficit of 25.6 billion dollars compared to the historical highs of February 2022.

Unlike USDT, the presence of USDC on Tron is non-existent, and in general, the supply of the stablecoin has not recovered from last year’s sharp decline.

The hope is that the bearish trend can stabilize and that USDC can attract capital that would likely be poured into DeFi applications, giving the right push for a rise in cryptocurrency prices.

Another protagonist of the reduction of stablecoins on the Ethereum blockchain is BUSD, a resource managed until recently by Binance and issued by Paxos, which a few months ago received a notice from the SEC to cease its activities.

In particular, Paxos is no longer authorized to issue this type of stablecoin and Binance is obliged to reduce its presence in the market.

Due to these events, the federal agency BUSD has seen a drastic reduction in its market strength, going from 18.19 billion dollars in February 2022 to the current 1.46 billion dollars.

Obviously BUSD is destined to disappear.

The rise of digital currencies, exemplified by Bitcoin (BTC), brought a groundbreaking shift in the financial landscape. 

However, it also brought to light a critical challenge: price volatility. Bitcoin and many other early cryptocurrencies exhibited extreme price fluctuations, making them difficult to use for everyday transactions or as a reliable store of value.

Users recognized the need for stability when dealing with digital assets, particularly when conducting business or holding assets for an extended period. This need for stability in the digital currency realm paved the way for the development of stablecoins.

As a result, stablecoins emerged to address the need for a reliable and consistent value in the digital currency space, employing various strategies such as asset pegging to fiat currencies or commodities and algorithmic mechanisms to achieve stability.

Stablecoins come in two primary categories, the first being collateralized stablecoins, like Tether (USDT), which are backed by real-world assets like fiat currencies or commodities, with each token linked to a specific asset to maintain stability.

The second type is algorithmic stablecoins, such as Dai (DAI) from MakerDAO, which don’t rely on physical collateral but instead use smart contracts and algorithms to manage supply and demand, striving to keep their price stable through decentralized governance and automated processes.

These stablecoins have since become integral components of the cryptocurrency ecosystem, enabling secure and stable digital transactions and opening up new possibilities for financial innovation. Here’s a closer look at some of the top stablecoins, how they came to be, and where they are now.

The birth of stablecoins

Tether (2014)

USDT launched in 2014 as a cryptocurrency created to bridge the gap between traditional fiat currencies and the digital currency ecosystem. It was founded by Tether, with Jan Ludovicus van der Velde serving as its CEO. 

USDT was introduced during a time when the cryptocurrency market was growing rapidly but lacked a stable asset-backed digital currency.

Its unique selling point was its peg to the United States dollar. Each USDT token was designed to represent one U.S. dollar.

USDT faced early controversies and skepticism. One major concern was whether Tether held the dollar reserves it claimed to back its tokens. The company’s opaque financial practices and lack of regular audits fueled doubts within the cryptocurrency community. However, in recent times, Tether has published information about its reserves.

Tether claims to hold enough reserves to maintain a 1:1 peg to dollars, backing every USDT in circulation. This peg to a fiat currency was intended to provide users with a reliable and stable digital currency for various use cases, including trading and remittances.

According to a full reserve breakdown in 2023, Tether is backed by cash, cash equivalents secured loans, corporate bonds and other investments, including digital tokens.

A spokesperson for Tether told Cointelegraph, “Tether’s Q2 2023 assurance report highlights our prudent investment strategy. We have 85% in cash and cash equivalents, around $72.5 billion in U.S. Treasurys, along with smaller holdings in assets like gold and Bitcoin. We are gradually eliminating secured loans from our reserves. Last quarter, we added $850 million to our excess reserves, totaling about $3.3 billion, further bolstering Tether’s stability.”

Tether reserve assets as of Q2 2023. Source: Tether

Still, Tether’s role in the cryptocurrency market has drawn scrutiny. It has become widely used to transfer value between different cryptocurrency exchanges, allowing traders to avoid using traditional banking systems. Some critics alleged that Tether was used to manipulate cryptocurrency prices, particularly Bitcoin, by creating synthetic demand.

Despite these controversies, Tether remained one of the most widely used stablecoins in the cryptocurrency ecosystem, serving as a crucial tool for traders and investors navigating the volatile crypto markets.

Dai (2017)

DAI is a decentralized stablecoin that operates within the Ethereum blockchain ecosystem. It was created by the MakerDAO project, which was founded in 2014 with the goal of establishing a decentralized and algorithmic stablecoin solution. 

Dai is not backed by a reserve of fiat currency. Instead, Dai is collateralized by a variety of cryptocurrencies, primarily Ether (ETH), which users lock up in a smart contract called a collateralized debt position (CDP).

Users who want to generate Dai deposit a certain amount of Ethereum into a CDP and then create DAI tokens based on the collateral’s value. The user can then use these DAI tokens as a stable medium of exchange or store of value.

Recent: Terrorist fundraising: Is crypto really to blame?

To ensure the stability of Dai, the MakerDAO system monitors the collateral’s value in the CDP. If the value of the collateral falls below a specified threshold (known as the liquidation ratio), the system can automatically sell the collateral to buy back Dai tokens and stabilize its value.

Additionally, the stability mechanisms of Dai have evolved over time. In addition to Ethereum, MakerDAO has introduced multicollateral Dai (MCD), allowing users to collateralize a wider range of assets, further diversifying the system and reducing its dependency on a single cryptocurrency. This evolution has made Dai more resilient and adaptable to market changes.

USD Coin (2018)

USD Coin (USDC) was launched in September 2018 as a joint venture between two well-known cryptocurrency companies, Circle and Coinbase. The stablecoin is also managed by Centre, a consortium co-founded by the two companies.

However, Circle and Coinbase dissolved Centre, the group responsible for overseeing USDC since 2018, in August 2023. As a result, Circle was given sole governance of USDC.

The coin temporarily lost its 1:1 peg with the U.S. dollar in March 2023 when Silicon Valley Bank, where Circle held $3.3 billion of its currency reserves, collapsed due to a liquidity crisis. While the coin briefly dipped to $0.87, Circle later confirmed that it was able to withdraw its reserves from SVB, restoring the 1:1 peg, but not without a blow to user confidence.

USDC’s primary purpose is to provide a digital representation of the U.S. dollar, making it easier for users to transact in the cryptocurrency space while avoiding the price volatility associated with other cryptocurrencies like Bitcoin or Ethereum. Each USDC token is meant to be backed by a corresponding amount of dollars held in reserve, which is regularly audited to maintain transparency and trust within the ecosystem.

Breakdown of Circle’s reserves. Source: Circle

USDC operates on the Ethereum blockchain as an ERC-20 token. However, it has since expanded to other blockchains like Alogrand, Stellar, Base and Optimism to increase its scalability and reduce transaction costs. This interoperability has broadened its use cases beyond just the Ethereum network, making it accessible to a more extensive range of users and applications.

Within the decentralized finance (DeFi) ecosystem, USDC is used in many ways. First, it functions as a source of liquidity in decentralized exchanges like Uniswap and Curve. Users provide USDC to these platforms, becoming liquidity providers and earning a share of the transaction fees generated by these pools. This offers a way to generate passive income from USDC holdings.

Additionally, USDC can be used as collateral for borrowing on DeFi lending platforms such as Compound and Aave. Users lock up their USDC assets as collateral, allowing them to borrow other cryptocurrencies or stablecoins. This enables leverage and liquidity without traditional intermediaries, and it also lets users earn interest on their USDC deposits while using them as collateral.

Furthermore, DeFi enthusiasts often engage in yield farming and staking using USDC. By participating in liquidity pools or staking their USDC tokens, users can receive rewards, typically in the form of governance tokens or interest.

TrueUSD (2018)

TrueUSD (TUSD) was released in March 2018 by TrustToken, a blockchain technology company focusing on creating asset-backed tokens. 

The coin has wavered from its 1:1 peg to the dollar at several points, one of the more recent incidents being when Prime Trust, a technology partner to the stablecoin, announced it was pausing TUSD mints.

Announcement:TUSD mints via Prime Trust are paused for further notification.Thanks for your understanding and we are sorry for any inconvenience. Please contact support@trueusd.com for any further questions.

— TrueUSD (@tusdio) June 10, 2023

In October 2023, the project came under fire as a hack at one of its third-party vendors potentially compromised the Know Your Customer data of TUSD users. TrueUSD quickly noted the reserves themselves were secure and never put at risk.

TrueUSD is often used in cryptocurrency trading and investment as a way to park funds during market volatility, offering traders a safe haven from crypto price fluctuations.

Binance USD (2019)

Binance USD (BUSD) is a collateralized stablecoin issued by Binance, one of the world’s largest cryptocurrency exchanges. It was introduced to the cryptocurrency market in September 2019. 

The value of BUSD is intended to remain close to 1:1 with the U.S. dollar, meaning that 1 BUSD is generally equivalent to 1 U.S. dollar. To achieve this stability, Binance holds equivalent amounts of U.S. dollars in reserve to back the BUSD tokens in circulation.

This reserve is regularly audited to ensure that it matches the total supply of BUSD, thus maintaining the coin’s peg to the U.S. dollar. This transparency and asset backing are essential for instilling trust among users and investors.

BUSD can be used for various purposes within the cryptocurrency space. Traders often use it as a stable medium to park their funds when they want to exit volatile cryptocurrency positions temporarily. It is also employed in trading pairs on Binance and other exchanges, allowing traders to move in and out of positions with ease.

Moreover, BUSD has found applications outside the trading world. It is commonly used in decentralized finance platforms and yield farming protocols like PancakeSwap as a stable asset to provide liquidity or collateralize loans. However, recently, Binance has started to wind down support for the BUSD stablecoin and plans to stop the support for BUSD entirely by 2024.

This decision was made due to its issuer, Paxos, being ordered to stop the minting of BUSD by the New York Department of Financial Services.

TerraUSD (2020)

TerraClassicUSD (USTC) — formerly known as TerraUSD (UST) — is a stablecoin released in 2018 that was algorithmically stabilized rather than being backed by a reserve of traditional assets like fiat-collateralized stablecoins. 

USTC distinguished itself by operating on a unique algorithmic mechanism that used incentives and disincentives to keep its value close to $1. One of the key features of USTC was its use of Luna (LUNA), the native cryptocurrency of the Terra blockchain, as collateral.

When USTC’s price deviated from its $1 target, a mechanism called the Terra Stability Reserve came into play. If TerraUSD was trading above $1, users could mint new TerraUSD by locking up Luna as collateral. Conversely, when TerraUSD was trading below $1, users could redeem it for Luna at a profit, effectively balancing the supply and demand to bring the price back to its target.

On May 7, 2022, USTC depegged from the dollar after a series of trades took advantage of a “shallow” pool on the decentralized exchange 3pool, causing the coin to lose its peg to the dollar.

Efforts to restore the peg worked briefly but were ultimately unsuccessful. During the same period, the complementary token, LUNA, originally intended to provide price stability to UST, suffered a dramatic decline, plummeting from $80 to $0.005.

The following day, on May 25, Terra’s network validators voted in favor of a transformative proposal presented by Do Kwon, one of the project’s co-founders. This proposal sought to launch a new blockchain called Terra 2.0, which would notably exclude a stablecoin component.

Under this plan, previous holders of LUNA and UST would receive the new blockchain’s native token, Terra (LUNA2), based on the amount of these tokens they held. This transition aimed to recalibrate the Terra ecosystem and diversify its offerings.

Importantly, the original Terra blockchain would continue to function alongside Terra 2.0, and its token would be renamed to Luna Classic (LUNC), while TerraUSD was rebranded as TerraClassicUSD or USTC.

Overall, this saga called into question the practicality and stability of algorithmically balanced stablecoins, as user trust in such ecosystems and $50 billion in value evaporated.

The evolving landscape of stablecoin projects

Regulatory changes are a significant factor influencing the stablecoin landscape. Governments and regulatory bodies are increasingly scrutinizing stablecoins due to financial stability, consumer protection and Anti-Money Laundering (AML) compliance concerns. In October, U.S. Federal Reserve Board Governor Michelle Bowman argued against the use of stablecoins due to their low level of regulation.

Some countries are actively working on regulatory frameworks to address stablecoin issuance and usage within their jurisdictions. These regulations may require stablecoin issuers to adhere to specific reserve and reporting requirements. For example, Singapore requires stablecoins to maintain minimum base capital and liquid assets to reduce the risk of insolvency.

In July, the Financial Stability Board (FSB), which monitors and makes regulations regarding the global financial system, created a cryptocurrency regulatory proposal. The FSB suggested that global stablecoin issuers establish a governance body and that the minimum reserve asset ratio be set at 1:1 unless the issuer “is subject to adequate prudential requirements” like commercial bank standards.

Stablecoin projects themselves have also been evolving along with changing legal and economic conditions.

Competition among stablecoin projects has increased transparency, with many issuers providing regular audits and attestation reports to prove their asset backing and stability. Cross-chain interoperability is also a growing trend, allowing stablecoins to move seamlessly between blockchain networks.

Tether’s spokesperson said, “The potential advantages and challenges of stablecoins moving seamlessly between different blockchain networks are significant [...] This capability enhances interoperability, allowing users to transact across various ecosystems, fostering a more interconnected blockchain space. Additionally, it grants access to unique features and applications on different blockchains, enabling users to leverage the strengths of each network for specific use cases.”

Magazine: Ethereum restaking: Blockchain innovation or dangerous house of cards?

DeFi is another industry where stablecoins are growing in popularity. Flex Yang, founder of Hope.money, a stablecoin protocol backed by crypto-native reserves, told Cointelegraph, “Stablecoins also play a pivotal role in the DeFi ecosystem, enabling users to engage in lending, borrowing, trading and earning interest without exposing themselves to the volatility of other cryptocurrencies. For instance, staking USDT for a year can result in an annualized return of approximately 6%.”

Stablecoins also enable yield farming and liquidity provisioning in DeFi. Users can provide liquidity to decentralized exchanges and automated market makers by pairing stablecoins with other cryptocurrencies. This process, known as liquidity provisioning, allows users to earn fees and incentives while maintaining the stability of their assets.

As stablecoins play a crucial role in the broader cryptocurrency and financial landscape, expect ongoing innovation, partnerships and adaptation to market dynamics.

A stablecoin is a specific type of cryptocurrency designed to maintain a relatively steady value. In contrast to the typical volatility associated with cryptocurrencies, stablecoins are purposefully engineered to act as a safeguard against significant price fluctuations.
To achieve this stability, stablecoins rely on a mechanism called a "peg," which serves as a reference point for their value. This concept is akin to how some countries link their currency's value to another nation's currency to ensure stability. Many stablecoins, such as USDT and DAI, strive to consistently maintain a value equivalent to $1.
What Happens When a Stablecoin Depegs?
When a stablecoin deviates from its designated peg value, this occurrence is referred to as a "depegging event." Stablecoins have gained significant traction over the years and now contribute to daily trading volumes amounting to billions of dollars.
Due to their widespread use, a depegging event can hold substantial implications. In the subsequent sections of this article, we will delve into historical occurrences of stablecoin depegging. But before that, let's explore the mechanisms employed by stablecoins to maintain their pegs.
#webgtr #StablecoinPeg #Stablecoins #BTC #Blur

The continuous growth of cryptocurrencies has garnered the attention of financial authorities and central institutions all over the globe. The dynamic landscape has shown stablecoins’ role as a significant player in the financial industry that offers a security blend of traditional assets and blockchain technology. 

Skepticism on potential risks that are coupled with stablecoin investment still loom, and this has raised concerns among investors in the market. Among the officials who have expressed their concerns include the Bank of England, which has shown interest in central bank digital currencies (CBDC). 

Federal Reserve comments on stablecoins regulation

According to Michael Barr, the Federal Reserve bank cop announced on Friday at the Economics of Payment XII Conference that stablecoins need to be regulated. This is in light of the overfishing standards of digital currencies, as Barr analyzed the cryptos pegged to the US Dollar. He commented that these offerings needed to be encompassed in regulatory developments. 

Following the collapse of FTX, the United States government has sought to improve and implement regulations on digital currencies. Moreover, the US has targeted the whole crypto industry, focusing efforts on combating the predicted connections of crypto assets to criminal activities. 

This has prompted the authority’s current endeavors to include stablecoins in regulatory frameworks as part of their growing changes. Crypto regulation has been the topic since the beginning of the year, following the recent collapse of the FTX crypto exchange firm that injured the whole crypto community. 

This increased government attention to digital assets. Part of this proceeding is Capitol Hill’s increased attention to the digital currency industry’s policymaking. Considering the growing developments, lawmakers and other central authorities worldwide are approaching this new phase of the industry with much concern. 

Sentiments on stablecoins regulation

According to Friday’s announcement by the Federal Reserve, stablecoins need to be regulated as part of the growing frameworks in the adoption of digital currencies, and Michael Barr scopes more focus to government-pegged cryptocurrencies. 

According to Barr, these pegged currencies imply these assets are “borrowing trust of the central bank,” which creates a need for necessary laws and regulations. He added:

The Federal Reserve has a strong interest in ensuring that any stablecoin offerings operate within an appropriate federal prudential oversight framework, so they do not threaten financial stability or payment system integrity.

Michael Barr 

Additionally, the US has commented on the growing supervision of banks using stablecoins. Barr stated his worry about assets that aren’t overseen by the federal authority. 

He was also joined in the commentary of the Central Bank Digital Currency (CBDC) by Sir Jon Cunliffe, now former deputy governor of the Bank of England (BOE), as he made his last speech at the conference. Cunliffe’s 10-year term ends on October 31, and he also emphasized that no CBDC decisions had been made in England. 

However, in a consultation paper published early this year, Cunliffe showed his interest in CBDCs and concluded he received over 50,000 responses. He had envisioned, “Private companies would be able to integrate and program the Digital Pound, as the settlement asset, into the services they would offer to wallet holders.” Cunliffe also added:

I would observe, if only a little tongue in cheek, that criticisms of the Digital Pound have ranged from concerns that it would […] disintermediate the banking system and threaten financial stability, to, at the same time, concerns that there would be no use for it and it would be a ‘solution looking for a problem.

Sir Jon Cunliffe

He emphasized that the BOE would issue an official decision and report on the CBDC discussion included in his consultation paper. He noted that this response would be issued in the coming months.