Paxos (PAX) Trading Against Tether (USDT) Takes off on Binance

The exchange made good on its promise to create bridges between exchanges through stablecoins.

Binance saw the recently-listed Paxos-Tether (PAX/USDT) trading pair take off with nearly $2.5 million in volumes in 24 hours, showing the need for stablecoins to bridge different exchanges.

Currently, Binance carries more than 87% of trading against PAX, increasing its liquidity with one of the full-disclosure, legalized stablecoins. PAX launched Binance trading on October 2, with the BTC pair already reaching 153 BTC volumes in 24 hours.

Stablecoins pegged to the US dollar are seen as one of the most intuitive instruments for trading. However, several startups are seeking an alternative to the prevalence of USDT. The first days of trading saw funds flow into PAX. USDT is also paired with TrueUSD (TUSD), another Binance-traded stablecoin. While on the surface all assets keep their dollar peg, trust in stablecoins varies, and USDT may be sold for other assets.

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The PAX token also spreads to other exchanges and may be swapped for other stablecoins. For now, the supply of PAX remains low, as its issuance is, in theory, linked to actual funds sent in exchange for the coin. The principle is the same as that of TUSD. However, after a few months, the supply of TUSD gradually grew to above 100 million tokens.

The TUSD/USDT market is also extremely active on Binance, with significant buying. Both TUSD and PAX broke their peg temporarily, to see bidding at $1.05. At the same time, USDT traded for 99 cents, dragged down by selling. On Kraken, the dollar market saw USDT slide to $0.95, a significant deviation for a stablecoin.

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The fears surrounding USDT may be in fact beneficial for the new dollar-pegged coins, which are just now making their way on the markets, and also growing their supply. The trends in trading will show if some of the USDT holders move onto other stablecoins.