For a while I’ve wanted to write something about stablecoins, these tokens on the blockchains, that are backed by some underlying asset.
Usually we associate stablecoins with those backed by a currency, like USD or Euros. But it doesn’t need to be backed by currency, it can be backed by commodities, stocks, bonds, etc.
This gives you the benefit of having a token you can easily exchange, transfer and utilize in smart contracts, and also having it backed by more than just pure human emotions and speculation.
But it’s hard to write something uplifting and positive above stablecoins, with their future potential, when the number one example of a stablecoin is neither a DeFi project nor built on any sort of concept of transparency.
By market cap, looking at available stablecoins as of today, we find Tether at the top. A shady CeFi that’s never been audited to any acceptable standard, with dodgy off-shore banking connections, primarily used on unregulated centralized exchanges without any banking connection of their own.
It doesn’t fill me with confidence writing that, and it shouldn’t fill you with confidence reading it either.
As others have documented and blogged about already, I find it unlikely that an organization that’s been persistent in lying and hiding information will ever come around and suddenly embrace transparency. And while some might argue they could, over time, manage to build up a reserve to back USDT one-to-one, through dodgy methods, I find it unlikely.
If you actually were backed, why wouldn’t you put that up there as a selling point? Fully audited, approved, and generally accepted? What possible other reason, than unsavory motives, could there be for this?
Now, while it’s sad that the number 1 stablecoin, by market cap, as of writing this, is such a shady business, it highlights the early days of blockchains and cryptocurrencies in general.
It’s hard to say when the printer stops going brrrr, but when it does, there’s going to be a lot of mispriced crypto out there. I doubt it will be nice..