Binance, the world’s largest cryptocurrency exchange, has become the dominant holder of TrueUSD (TUSD), a stablecoin pegged to the US dollar.
TUSD Concentration on Binance
As of Thursday, afternoon, Binance held around $2.7 billion of TUSD, which represents approximately 90% of the stablecoin’s total circulating supply of over $3 billion.
This significant concentration of TUSD on Binance has raised concerns about the stablecoin’s stability and decentralization.
Binance’s Promotion of TUSD
Binance has aggressively promoted TUSD this year, offering incentives such as zero maker fees on all TUSD spot and margin trading pairs.
As a result, TUSD’s trading volume has become almost exclusively concentrated on Binance.
While TUSD has grown in market capitalization in 2023, largely due to Binance’s promotion, it has also faced scrutiny due to its association with Prime Trust, a Nevada-based crypto custodian that recently collapsed.
TUSD’s Backing and Prime Trust
In February 2023, TUSD auditors reported that only $26,000 in TUSD collateral was trapped at Prime Trust at the time of its collapse.
However, concerns remain about TUSD’s backing, as Prime Trust held a significant portion of the collateral for other stablecoins, such as Tether (USDT) and USD Coin (USDC).
Implications for Crypto Market
The concentration of TUSD on Binance and its association with Prime Trust have raised questions about the stability of the stablecoin and the broader crypto market.
Stablecoins are considered a key component of the crypto ecosystem, as they provide a stable and reliable way to store and transfer value without the volatility associated with other cryptocurrencies.
If TUSD’s stability is compromised, it could have a negative impact on the entire crypto market.
FAQ
- What is a stablecoin? A stablecoin is a cryptocurrency that is pegged to a fiat currency, such as the US dollar, to maintain a stable value.
- What is TrueUSD (TUSD)? TrueUSD is a US dollar-pegged stablecoin that was launched in 2018. It is the fifth largest stablecoin by market capitalization.
- What is Binance? Binance is the world’s largest cryptocurrency exchange, offering a wide range of cryptocurrencies and trading pairs.
- What is Prime Trust? Prime Trust is a Nevada-based crypto custodian that provides custody and other services to crypto companies.
- What is USDT? Tether (USDT) is the largest stablecoin by market capitalization. It is pegged to the US dollar and has been the subject of controversy over its reserves and stability.
- What is USDC? USD Coin (USDC) is the second largest stablecoin by market capitalization. It is also pegged to the US dollar and is backed by Circle, a US-based cryptocurrency company.
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