Audited stablecoins are releasing millions of coins as Tether sags
Cryptocurrency traders are seeking Tether alternatives, and they're finding them.
Paxos launched on 10 September 2018 as a stablecoin tethered to the US dollar. Since then, it's lobbed a whopping US$50 million onto the Ethereum blockchain (PAX is an ERC20).
Paxos's main point of difference is that it's one of the first US stablecoins to be approved by regulators, specifically by the New York Department of Financial Services. And as is usual for just about every single backed stablecoin other than Tether, its holdings are regularly audited by registered accountants. It also received a heavy dose of private investment before its launch.
But a large part of its release might have come in the last couple of days. A similar picture is emerging among other stablecoins.
A good time to be stable
Paxos took off quickly after launch, with precisely $14,644,074.19 issued between the 10 September launch and the first audit report (PDF), from the Withum accounting firm on 28 September.
According to the blockchain, that number is now up to over 50 million, in the form of about 50 million PAX, currently "worth" $52,144,868.18 due to the strange situation currently infusing the cryptocurrency markets around a sudden loss of faith in Tether.
Seemingly all stablecoins except Tether are currently trading at a premium. PAX is no exception, having visited numbers as high as $1.16 within the last 24 hours according to LiveCoinWatch.
This means Paxos has issued a staggering $36 million in the last two and a half weeks, much of which is likely due specifically to Tether's slump. People are definitely keen on trading out their now-dubious Tether for the more confidence-inspiring PAX.
Paxos vice president of marketing and communications, Dorothy Chang, has also suggested that a large amount of Paxos's circulating $50 million came out in the last couple of days as a direct response to the Tether troubles.
"We *just* announced 2 hrs ago that Paxos had issued $36M a month after launch. And now… we are over $50M already. Demand for is accelerating faster than I can tweet up with," - Dorothy Chang.
TrueUSD may also have had a wild ride in the last couple of days. Its last audit on 1 October verified a balance of about $103 million, but that's now up to almost $160 million – this means almost $60 million has been released in just two weeks.
The enormous high-speed growth of audited Tether alternatives is clearly showing that the markets are ready for an alternative. Markedly elevated Tether trade volumes and a price that's been consistently sagging under $1 for about a full day now, even as other stablecoins are riding above their own pegs, suggests that people are eagerly shedding their Tether.
You can't blame the markets. With nearly-identically functioning, yet much more transparent, reliable and trustworthy stablecoins flooding the market, most people probably have little reason to keep using Tether.
It's worth noting that everything going on around Tether and its bedfellows at Noble Bank and Bitfinex isn't necessarily just the cause of alternative stablecoins flooding the market. It might also be the result of the solvency issues that are circulating around Tether. A product such as Tether will inevitably have a tough time when it's no longer competitive, and the situation will inevitable come to a head at some point.
Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and ADA.