Binance’s research arm has conducted a study revealing that users favor stablecoins like Tether. Binance Research, together with Binance Trading, has published a report of the study that surveyed at least 100 VIP and institutional investors. In their findings, the exchange noted that:

“Stablecoins are used by nearly all market participants, with USDT being the “go-to stablecoin.” Amidst the recent turmoil regarding Tether, many investors have been exploring alternative offerings, particularly USDC and PAX”.

Additionally, non-Chinese investors used USDC more, while PAX was standard with the Chinese. Clients, however, were asking for a USDT alternative that had the same inherent liquidity profile. DAI, the stablecoin from the Maker ecosystem had been used by 20 percent of the study’s respondents.  

A LendingBlock study also backs Binance’s findings. LendingBlock says that 68 percent of all large institutional investors prefer to borrow or lend in stablecoins. The respondents in the Binance study were, nonetheless, not in favor of Facebook’s, Samsung’s, or JP Morgan’s versions. They said that stablecoins from private companies had low potential growth drivers.

The Year of Stablecoins

Stablecoins, a product of the blockchain revolution, are playing their part in deconstructing an age-old belief in centralized finance. There has been a shift towards trust placed in technology rather than institutions when it comes to money.

Today, there are over 120 stablecoins in the market. With the massive support they are receiving from these well-endowed investors, these tokens may lead the crypto mass adoption charge. Stablecoins are payment tokens that act as a store of value. They also have other currency features such as an ability to work as a unit of account and a medium of exchange.

Institutional investors are a bit risk-averse, meaning that while they do want to adopt crypto, the extreme volatility, keeps them primarily at bay. A stablecoin, unlike other cryptocurrencies such as Bitcoin and ETH, is designed for stability and decreased volatility. These tokens are also scalable, redeemable, decentralized, and private. 

Some stablecoins are fiat-backed, pegged against fiat currencies as the USD. For security and accountability, the issuing companies hold their underlying assets with a third party, vault, or bank account. Alternatively, they can be backed with precious metals such as gold and silver. These stablecoins are a favorite for most trusted by investors as it is easy to grasp, is elegant, and an easy way to onboard users to cryptocurrency trading.  

There is, nevertheless, one disadvantage over decentralized crypto: Their issuers are centralized entities, which makes their usage more prone to fraud. 

Binance Supporting Several Stablecoins

Additionally, there are crypto-backed stablecoins that offer the decentralized benefits of crypto. These do not have a central point of failure, unlike fiat-collateralized stablecoins. The most well known of these tokens is the MakerDAI. These coins/tokens, however, have less stability compared to the fiat-backed coins. There are stablecoins too that are not backed by real-world assets. An algorithm is designed to maintain its stability.  

Stablecoins have a total addressable market value of $90 trillion, which is all the money in the world. They could, therefore in the future challenge the need to have fiat backed by governments and bring a change to the global financial system.

To reap from the blossoming stablecoin market, Binance has announced that it is releasing stablecoins of its own. The first Binance release will be the Binance GBP- backed by the British pound. Binance will also issue other stablecoins backed by various currencies. Pundits have said that Binance is hot after the USDT market share. USDT has currently gobbled up 50 percent of the stablecoin volume on the Binance exchange.