USD currency () holders had a long weekend, but fans of several other stablecoins saw a sudden, dramatic spike in the market caps of their favorite projects.
On Friday night, Circle, the company behind USDC, will announce the world’s second largest stablecoin Market capitalizationfell off his dollar peg to $0.87 after the company revealed it had a few $3.3 billion in cash reserves in the now collapsed Silicon Valley Bank (SVB).
Circle was quick to reassure people that this exposure was minimal, after all, the total amount of cash the company had in SVB was less than 10% of its $42.1 billion cash reserves that support the value of USDC.
Intervention by both on Monday US And British regulators have helped restore public confidence in Circle. Today, the stablecoin only trades a fraction of a penny from its peg.
Despite the recovery, several competitors have already benefited from Circle’s short swing.
historically speaking, has been the most controversial stablecoin issuer on this list and similarly USDT gained the least over the weekend.
In 2021, Alex Mashinsky, the then CEO of now-bankrupt cryptocurrency lender Celsius, told the Financial times which was Tether USDT beating against Bitcoin and Ethereum collateral for certain large clients, in direct conflict with Tether’s own terms.
That year, Tether was hit a $41 million fine by the Commodity Futures Trading Commission (CFTC) – an independent US government watchdog that regulates derivatives – for lying about its cash reserves and not adequately supporting USDT for most of the period between June 1, 2016 and February 25, 2019.
Since then, Tether has been working to improve transparency, and in August 2022 it will rented accounting firm BDO Italia to prepare regular attestation reports for its USDT reserves.
How much it won: USDT had a market cap of $71.9 billion on Friday. As of Monday night, that figure had blown up to nearly $75 billion before pulling back $73.1 billion at the time of writingan overall increase of 1.6% over the period under review.
How it is supported: According to the last published audit reportdated December 2022, 82% of its reserves are held in “Cash & Cash Equivalent & Other Short-Term Deposits & Commercial Paper”, which consists largely of US Treasury Bills (58.5% of total reserves). Cash and bank deposits make up only 8% of the total, with the remainder divided between money market funds, reverse repurchase agreements, non-U.S. Treasury bills and other assets.
The offer is maintained and regulated by the one of the decentralized finance ( ) longest running projects.
DAI is supported by cryptocurrencies—mainly USDC, although other Ethereum-based cryptocurrencies can be used to coin it, including Ethereum and Wrapped Bitcoin (WBTC). Due to the decentralized nature of much of the collateral and the fact that the protocol overseeing the stablecoin is not controlled by a single company, it is often referred to as a decentralized stablecoin.
It is currently the fourth largest stablecoin in the market with a market cap of $6.2 billion.
How much it won: DAI had a market cap of $4.9 billion for most of Friday. As of Monday morning, that figure was up 28.6% to $6.3 billion and it has managed to hold the fort to this day. DAI was probably a popular destination for people who wanted to jettison USDC. If people burned USDC en masseDAI’s offer monthsbut DAI also deposited over the weekend, sinking to a low of $0.88 on Saturday, in almost perfect synchronicity with USDC.
How it is supported: For every $1 in DAI, users must make a deposit about $1.51 of cryptocurrency. Since the issuance is managed by a dynamic system of smart contracts, if the price of ETH falls rapidly, users will have to top up their collateral or risk being liquidated.
TrueUSD is an Ethereum-based stablecoin that bills itself as “the first regulated stablecoin fully backed by the US dollar”.
Introduced in 2018TUSD is backed 1:1 by nothing but cold hard fiat, according to Chainlink’s proof of reserve monitoring tool.
TrustToken stores its fiat reserves in third-party bank accounts owned by trust companies who have signed an agreement to publish monthly audits. This spread of third-party accounts reduces counterparty risk, protects token holders, and ensures that the TrustToken platform itself does not have direct access to the funds, increasing consumer confidence.
Last month, when the US Securities and Exchange Commission started preparing for a lawsuit against Paxos, the issuer of Binance’s dollar-pegged BUSD stablecoin, the popular exchange minted $180 million in TUSD as an alternative. This would explain the eye-popping 114.5% increase in TUSD’s market cap over the past 30 days.
However, TrueUSD was affected by exposure to the now collapsed crypto bank Silvergate.
TUSD minting and redemption was paused for “a small number” of Signature Bank users, but remained “unaffected” across the rest of TrueUSD’s banking network, according to a tweet on Monday through the project.
How much it won: For virtually all of Friday, TUSD’s market cap was around $1.3 billion. For the past two days, it has sat comfortably above $2 billion, following a 53.8% increase in market cap.
How it is supported: TUSD’s circulating supply of $2,024,213,471 is currently backed by fiat bank reserves of $2,032,505,442, according to real-time proof of reserves.
Liquidity USD (LUSD)
If you know how DAI works, then you already know how Liquity works. It works under many of the same mechanisms, such as collateralized loans using native cryptocurrencies, but with the added root of interest-free loans. Liquity charges a small one-time fee up front instead of variable interest rates on the loans.
LUSD is the dollar-pegged native token of the DeFi lending protocol Liquity. Users receive loans that are disbursed in LUSD by locking up their Ethereum as collateral.
After the dust settled on Monday after the crypto banking crisis and Circle depegging, Liquity CEO Michael Svoboda took a moment to promote his stablecoin by retweet throngs of LUSD fans.
How much it won: On Friday, LUSD had a market cap of around $230 million. This blew up 10.4% over the weekend and today is trading at $256.2 million.
How it is supported: Liquity users receive loans from LUSD by locking up their Ethereum as collateral. For every $1.10 worth of Ethereum collateralized in a Liquity smart contract, $1 worth of LUSD is minted”during normal operationmaking the collateral ratio more favorable to borrowers than DAI.
The views and opinions of the author are for informational purposes only and do not constitute financial, investment or other advice.