An investigative report from cryptocurrency exchange Binance revealed that stablecoin market capitalization grew over 3,000% from January 2020 to January 2022. The years 2020 and 2021 have witnessed the maximum growth in the stablecoin market, this includes the growth in the use of stablecoins in Latin America, with an emphasis on nations such as Argentina and Brazil.
The market is down 7.7% from the start of 2022 through June, according to Binance Research Report June 2022. The report further noted that in 2022, growth was much more moderate than in the previous two years.
“They have exploded in size, and after the growth of decentralized finance (DeFi), stablecoins found more and more use cases in the cryptocurrency landscape. In just a few years, they have become the central backbone of cryptocurrency adoptionbut have also continued to come under increased scrutiny from regulators to strike a balance between consumer protection and the adoption of cryptocurrencies”, says the report.
The report also highlighted how the failure of TerraUSD (UST) halted the growth journey in May 2022, although the month of June points to a rebound in the growth of the stablecoin market. The report further said that Tether remains the top centralized stablecoin, though both BUSD and USDC are catching up quickly. During the first half of the year, BUSD grew more than 22%, surpassing 17 billion in market capitalization. During the same period, the Tether’s USDT is down more than 15%.
New stablecoins
The growth of the stablecoin market and the strong claim that UST obtained before its bankruptcy It is also motivating the launch of new stablecoins, mainly stablecoins that have their parity pegged to the dollar but are collateralized in other cryptocurrencies, as is the case with HAY, a stablecoin that has been gaining prominence in DeFi applications on BNBChain.
There is a stablecoin over-collateralized by BNB pegged to the USD, this new type of stablecoin on the market is called “overcollateralized stablecoins“, namely, own more than 100% of the value of the coins issued. Therefore, in HAY’s case, it is comparable to MakerDAO’s DAI coin in terms of overcollateralization as a stablecoin.
Due to recent events that proved disastrous for stablecoin algorithmic investors, the stablecoin market seems ripe for disruption and one of the main features of stablecoins based on decentralized finance protocols is the ability to make loans. guaranteed.
In the case of HAY, the minimum collateral ratio for HAY is 66%, which means that users can borrow up to 66% of the collateral value of BNB they deposit. Also, if the collateralized BNB falls below the 66% threshold, it is liquidated. This settlement mechanism ensures that Helium reserves always have more BNB than there is in circulation..
Users who borrow HAY will also receive HAY liquid staking tokens (rewarded with aBNBc tokens or overrun aBNBb tokens). Native HAY can be wagered within the Helio protocol for double-digit betting returns. HAY Liquid Stake Tokens can be used in external DeFi protocols to generate additional yield without lock-up periods.
Finally, regarding the Binance report, the document highlights that, At this point in the market, stablecoins may represent the best approach to connect payments and other real-world applications with the cryptocurrency space..
“For Algorithmic Stablecoins, the overcollateralized model has so far proven to be more resilient. With the rise in cryptocurrency adoption and many use cases for stablecoins, there is plenty of room for projects looking to compete, and we have seen more and more L1 announcing their own version of algorithmic stablecoin this year.”, says the report.
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