Captainvalor Gary basin conducted an analysis of the dynamics of liquidity and stability of the active stablon projects.
Year, which was only a third, can rightly be called the Year tablconv, and today I would like to talk about upcoming products, and not about how stable cryptocurrency, and about living this kind of projects.
The first thing we notice — of such systems is still relatively small; the vast majority of projects are under development or closed testing.
An important event this year was the launch of the network TrueUSD from TrustToken (TUSD) will be more advanced and more transparent version of the current dominant player Tether (USDT). At the time of writing the market capitalization TrueUSD is about $ 60 million, and the average daily trading volume of about $ 10 million, according to Coinmarketcap.
For comparison: the market capitalization and trading volume Tether exceed $ 2 billion each.
From the perspective of today’s user stablon critical for two factors: stability and liquidity.
- Stability — a measure of how the coin deviates from the target price ($1),
- Liquidity also shows how many coins you can buy or sell without a significant market impact, or price slippage.
Stability can be approximated by different indicators of volatility, although in the case of stablename rather to talk about the price of the emission and not the standard deviation, liquidity can be judged by the trading volume — the more volume of transactions, the cheaper it will cost each of them. If you measure this parameter more accurately, it is necessary to take the order book and see how much you can sell or buy instantly within a predetermined range of the slippage (say, 1%).
In practice, these two factors are correlated: the greater the liquidity of steibliene, the less it is susceptible to short-term emissions prices. And these two factors — stability and liquidity — while no one even close to catching up Tether.
I turned to the table, market capitalization, because it’s a number that many are interested in — but it can be deceiving. For example, although the market capitalization Dai is approximately equal to that of TrueUSD, the first is much less liquid.
Below you can see that the pair TUSD/USDT on the stock exchange Binance incredibly
liquid — with several million dollars of cash liquidity available within a 1% deviation of the price. (I don’t believe these figures liquidity directly to TUSD, as most people who are interested in trading stablename for BTC or ETH and not between them.)
If the coin is used as a carrier of cost (HC), we expected high market capitalization is the coin worth more dollars. If it’s a medium of exchange (WITH), we can talk more about the volume — coin lot traded.
I have included in the table included a measure of velocity of money, calculated as the Average daily volume / Market cap. Have Tether this parameter is extremely high (this is the annual speed of more than 300, compared to M1 dollars — all dollars, in addition to the reserves of the banks — a rate of about 6), suggesting that the cryptocurrency is used primarily as a medium of exchange, and can also be an indicator that people actively avoid keep capital in a Tether.
Factors affecting the liquidity
It is interesting to talk about, due to some factors liquidity TUSD higher than Dai. In the first place is probably, market access — TUSD is present on the world’s most popular cryptobinary exchange Binance, and Dai sold mainly in the decentralized exchange system, the interface of which can hardly be called successful.
Moreover, given the direct benefits that TrustToken will receive from the distribution TUSD, it is likely that they are making great efforts to improve the liquidity of the cryptocurrency, and decentralized and therefore, relatively little coordinated team Maker, of course, is not able to compete with them.
In part, this explains why TUSD is traded on the major exchanges, and Dai there is an important point to consider when assessing the expected effectiveness of decentralized and centralized projects.
It is also worth to look at the market TUSD/USDT on Binance, any premium or discount and the direction in which it is proposed. Great USDT leads to a liquidity premium, because the liquidity is important for holders Tether. On the other hand, the market doubts that the Tether is really fully provided with Fiat money — thus, from a legal point of view, the system looks more vulnerable than TUSD.
Thus, comparing the price of these two tablconv we can understand how market participants assess the legal risks relatively more liquidity. You can see that they are trading very close to parity, although sometimes it happens the oscillation in one direction or another.
The distribution of ownership is another interesting variable. In the case of TrueUSD we see that about 60% of the tokens are three wallets, apparently corresponding to the Binance and Bittrex exchanges. Probably they are used for trade, as a source of liquidity.
Concentrations of Dai are also quite high: the 10 biggest wallets contain more than 50% of the total supply. Moreover, in the case of Dai, if you look at what addresses, and where are the translations, we can see that many of them are associated with large holders of MKR, which, apparently, means that Dai is mostly used by people (founders or investors) within the Maker ecosystem. On the other hand, have bitUSD from BitShares concentration of below — the first ten owns only 30%.
How stable stablein
Measuring stability, we can draw attention to the fact that it is highly correlated with liquidity. However, while Dai and bitUSD have similar trading volumes and relatively low liquidity, we see that bitUSD looks much less stable. Not only does he have a much wider range of prices (more emissions), but its average price is even not up to $1 — that would be natural for the dollar stablon.
Perhaps this is due to the unusual mechanism of the coin — it is not just provided dollars, it uses a so-called Oracle, to ensure the situation, when the cryptocurrency is trading at a premium to the dollar. It is believed that the Dai are not backed by Fiat currency.
Interestingly, bitCNY from BitShares (not included) currently has a maximum of tablconv trading volume with the exception of the Tether, and this is mostly due to the use of Eka cryptocurrency as a base for CoinTiger. It’s interesting, because the mechanism tablconv BitShares seems to be less effective than others, and they were not worth such targeted liquidity support, as in TUSD. Thus, apparently, the trading volume of Chinese stablon due to market demand.
We briefly discussed the dynamics, liquidity, and stability of the active currently stablon projects: Tether (USDT), TrueUSD (TUSD), Dai and bitUSD, and can conclude that the Tether continues to lead in all indicators, although TUSD for a fairly short period of time achieved considerable success.
Today, the main use tablconv — buying and selling of other cryptocurrencies, which means that users very important the minimum slippage and risk of loss. Thus, the competitors Tether will have to figure out how to stimulate the liquidity of secondary markets at a price of about $1.