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A recent report titled “The State Of Stablecoins” was released in late September 2018 to shed some light on the current state of the stablecoin market. The report, which happens to be the first of its kind, was meticulously composed to assess the different facets and applications of all 57 active Stablecoins – both live and pre-launch stablecoins, their relative performance, and the regulatory landscape.
It’s no news that the stablecoin market is an important part of the crypto-world, raising over $350m through various established funds. Earlier this year, the stablecoin Tether entered the top 10 cryptoassets by market value. Also, it has successfully gained recognition as the second most actively traded cryptocurrency.
According to the report, the stablecoin market has experienced a rapid growth in the past 12-18 months and this trend is predicted to continue at least in the near future. The stablecoin market now boasts of contributing about 1.5% or $3billion of the total market value of all cryptoassets.
On the issue of stability, the 23 live stablecoins have experienced a mixed stability over the years – both asset-backed and fiat backed with over 77% of the live stablecoins being asset-backed, which utilizes both on-chain collateral and off-chain collateral.
Still on the issue of stability, the report showed that about 66% of stablecoins are pegged to the U.S. dollar (the most common stability benchmark for cryptocurrency) and 44% pegged to other fiat currencies (such as euro, yen, etc.), commodities like gold, and inflation.
Stablecoins have spread across a wide range of technology platforms with Ethereum being the most commonly used platform and Bitcoin, NEO, and Stellar following closely behind.
With a wide range of application including but not limited to a store of value, medium of exchange, unit of account, performance measurement, dApps, remittance, pegged lending, and for smart insurance, stablecoins have moved from cryptoassets used only for nefarious activities to one widely embraced by different countries across the globe with the United States of America leading the trend.
While the citizens of the crypto-world see this as an overwhelming growth of the stablecoin market, there are yet some aspects of these cryptocurrencies that has stunted the growth of the stablecoin market so far. Some of these include the volatility of the coin (the speculative market and variations in price), skepticism by the government (which has made it difficult for businesses to fully embrace this technology), insecurities associated with using cryptocurrency, etc.
Thankfully, the report shows that stablecoin are yet to gain the assumed ‘perfect’ state and as such they are still prone to future innovations. We earnestly await these innovations that would curb the drawbacks hindering the growth of the stablecoin market.