The stablecoin economy experienced a deep loss in the first three months of 2023. Findings from Coingecko revealed that in Q1, stablecoins lost $6.2 billion. The data was focused on the top 15 stablecoins which have Tether (USDT), USDC, BUSD, DAI, and TUSD as the leading assets.
Stablecoins are a sort of cryptocurrency that is supposed to have a consistent value in proportion to an asset. Stablecoins come in a variety of flavors, including those backed by fiat currency reserves, commodities, and other cryptocurrencies.
They may provide investors with a more stable store of value, reduce volatility in cryptocurrency markets, and facilitate quicker transactions and payments. They do, however, entail concerns, such as not having enough reserves to completely back the stablecoin and being used for criminal reasons.
BUSD by Paxos goes down; USDC depegged
Further details from the report showed that BUSD and USDC suffered the most losses for the top 15 stablecoins. For BUSD, its issuing company, Paxos, was asked to stop its operations with BUSD. This brought about huge panic and impact on one of the most used stablecoins ever.
Then USDC suffered because of the brief depegging that occurred in March 2023. The $40+ billion market cap asset was hit by the market impact of the collapse of Silicon Valley Bank. Apart from USDC, BUSD, and DAI were also affected leaving USDT at the best spot as many investors clamored around USDT due to the instability in the other stablecoins.
“Tether (USDT) further strengthened its foothold, adding 20.5% ($13.6 billion) to its market cap,” Coingecko said. While USDC and BUSD shed 26.9% and 54.5%, respectively.
The Rise of True USD
As mentioned earlier, due to the crackdown on BUSD and Paxos, True USD came to the limelight after Binance and Tron invested $130 million and $750 million respectively into it.
TrueUSD (TUSD) is a stablecoin cryptocurrency backed by collateral held in escrow by numerous third-party trust firms. TrueUSD was released on Bittrex on March 5, 2018, by TrustToken and immediately gained popularity after the clamping of BUSD.
According to Coingecko, TUSD became the 5th largest stablecoin on 28 February 2023 after the Binance mint which was worth $130 million.