Massive selling of USDT by Tether signals the return of ‘wars of stablecoins’. Kaiko analysts conclude as much.
Experts noted a mismatch at the start of August in the main USDT-USDC pool on Uniswap V3 and the 3pool on Curve due to escalating sales of the stablecoin from Tether. However, in fact, this trend began in mid-July, when from the 15th to the 22nd on the largest DEX was traded 100 million USDT.
Net selling eased in the latter part of July, but spiked again on the 31st — the day after Curve exploit. Kaiko experts are not inclined to link the two latest events.
They also noted that on centralized exchanges in the last few days USDT traded below the dollar peg.
According to analysts, there are no obvious market reasons for traders to abandon the Tether stablecoin. On the contrary, the company reported $850 million in net income in Q2.
CTO Paolo Ardoino suggested that USDT sales could be linked to ‘unfair play’ and timed to the listing on Binance of the new ‘stablecoin’ FDUSD on July 26. The asset was launched by the Hong Kong-based company First Digital. But there is no evidence that these two events are connected, Kaiko acknowledged.
In early August, Changpeng Zhao criticized USDT, calling the asset a ‘black box’ with a ‘certain’ level of risk. Subsequently, the exchange moved part of its reserves—USD Coin (USDC)—into another stablecoin.
Amid this, NotChaseColeman noted that Zhao and Tron co-founder Justin Sun began converting USDC into fiat via USDT.
The commentator also noted rising True USD (TUSD) metrics. NotChaseColeman added that around 90% of TUSD supply is controlled by Binance. Meanwhile, over the past months the asset’s share of market trades rose from 0% to 20%.
Kaiko noted that FDUSD volumes did not quickly ramp after listing, despite the launch of zero-fee trading pairs. Daily turnover in the stablecoin rose above $200 million, then fell to around $30 million, barely reacting to incentives.
By contrast, trading volumes in TUSD rose significantly after the launch of zero-fee pairs with the stablecoin, analysts observed. In their view, this indicates that FDUSD failed to attract traders.
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«The conspiracy is in favor of FDUSD or not, but clearly the wars of stablecoins have returned. Despite Tether’s not-quite-perfect transparency history, traders historically turned a blind eye, and that means the mass selling is indeed puzzling», Kaiko analysts concluded.
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The largest stablecoin by market cap, backed by Binance, remains BUSD. However, the coin’s circulating supply shrank to $3.4 billion from $16.2 billion by mid-February. At that time the New York State Department of Financial Services ordered the stablecoin issuer—Paxos—to cease the issuance of new assets.
In August, the payments giant PayPal announced the launch of the stablecoin PayPal USD (PYUSD). Paxos was the partner.