Binance Unifies Stablecoins in Single Market
Binance will include quotes in pairs representing a basket of stablecoins to stave off the effect of Tether (USDT) fluctuations.
Binance announced an update to all of its Tether (USDT) markets, turning them into a basket of stablecoins. The USDⓈ market pairs will take into account other stablecoins listed on the exchange - TrueUSD (TUSD) and Paxos (PAX).
Binance is yet to announce which pairs are to be included in the new market. The exchange has a USDT wallet second in size only to that of the Tether treasury. Several major digital assets see their price heavily influenced by Binance trading.
The move to bundle several stablecoins arrives after USDT lost its dollar peg on several occasions, creating confusion and price fluctuation. Binance holds around 670 million USDT in two known wallets. At one point, the holdings were upward of 800 million USDT but were moved during the October crisis, with some of the stored USDT leaving the exchange.
It is unknown what effect the changes would have on price reporting. In cryptocurrencies, the dollar value of an asset is formed through complex relationships of trading pairs, and there are very small markets using fiat. With the increasing number of stablecoins in 2018, Binance has accepted new types of assets, including USDC, a fully legalized coin used on Coinbase. With this move, Binance will open more trading opportunities for owners of various stablecoins. However, it is yet unclear how the mix of stablecoins would work for individual traders.
Despite the removal of 1.3 billion USDT from the markets, the supply is still overshadowing all other stablecoins. The latest Bitcoin price moves also point to a relationship between injecting USDT on the Bitfinex exchange and an immediate BTC price recovery. Those relationships have continued to feed skepticism about USDT trading.
Stablecoins include varying types of assets, ranging from fully transparent ones backed by dollars, such as USDC, and algorithmic coins which use complex trading mechanisms to keep their dollar peg.