Original Title: "What Changes Will Happen to the Stablecoin Ecosystem of BNBChain After BUSD's Exit?"
Original Author: Wu Shuo Blockchain
Recently, Wu Shuo published a comprehensive overview of the entire process of BUSD being targeted by regulators. The US Securities and Exchange Commission (SEC) sued Paxos for using BUSD as an unregistered security, and subsequently the New York State Department of Financial Services (NYDFS) instructed Paxos to stop minting new BUSD. CZ also stated that "product adjustments will be made accordingly. For example, BUSD will no longer be used as the main currency pair for trading."
It can be foreseen that BUSD will gradually fade out of the history stage of stablecoins. Considering that BUSD is the flagship stablecoin of BNBChain, what changes will there be in the stablecoin ecosystem of BNBChain after this big flag falls?
According to defillama's data, the total market value of stablecoin ecosystem on BNBChain has exceeded 9 billion US dollars, and the market share of BUSD is as high as 53%, with a market value of approximately 4.8 billion US dollars.
Next is the market value of USDT, which is about 3.2 billion US dollars (35%), the market value of USDC is about 780 million US dollars (8.67%), and some stablecoins with a market value of less than 100 million US dollars, such as USDD, Dai, HAY, etc.
According to Paxos, BUSD can still be redeemed until at least February 2024. Although there is a buffer period of at least one year, the question we face in the face of the outflow of billions of dollars of stablecoins is how this will disrupt the stablecoin ecosystem of BNBChain.
- Is it inspiring the development of decentralized stablecoins?
- Should we further strengthen the dominant position of USDT/USDC on BNBChain?
Regarding the former, when faced with the suggestion of building a decentralized stablecoin similar to DAI, CZ has already responded by saying that at this juncture, we would prefer others to do it in order to make it more decentralized. We cannot do everything.
Looking back at the two players in the BNBChain stablecoin market, HAY & VAI, their market value is only a few million, even if we optimistically imagine that such projects can hold up the banner, it seems that their own market also has its limits. The development is as good as DAI on Ethereum, whose stablecoin market value is only about 5 billion US dollars. Converted to BNBChain, it is still unable to match the scale of centralized stablecoins like BUSD.
So far, it seems that the portion of stablecoin market share inherited by USDT/USDC after BUSD's exit is the most reasonable. However, what we need to know here is that USDT/USDC officials have not actually issued native stablecoins on the BNBChain, and strictly speaking, there is no native centralized USD stablecoin on the BNBChain, including BUSD, which is essentially a Binance-Peg Token held by Binance officials with native assets (i.e. BUSD on Ethereum) and anchored and issued as a BEP 20 Token on the BNBChain at a 1:1 ratio.
As most users only need to focus on the application experience, they actually have no profound understanding of the specific underlying properties of various assets. In fact, in the early days of BNBChain (initially named BSC), in order to attract external high-quality assets such as BTC, ETH, and stablecoins, Binance launched the Token Canal plan, which is essentially similar to wrapping assets, and Binance official acts as the processing center for native asset custody and wrapped asset issuance and redemption.
Later, with the introduction of various assets and the expansion of scale, Binance officially referred to this type of token as Binance-Peg Token, or BToken.
According to Binance's official collateral reserve proof for BToken, we have learned that there are currently 97 BTokens, including approximately 5.4 billion ERC20 BUSD reserves, corresponding to approximately 4.8 billion BEP20 BUSD and BUSD on other corresponding chains.
Previously, NYDFS emphasized that Paxos was authorized to issue BUSD on the Ethereum blockchain, but the department has not authorized Binance-Peg BUSD on any blockchain. It seems that NYDFS's true motivation is actually Binance Pegged BUSD, rather than concerns about whether there is 100% reserve support. After all, Binance has publicly transparent reserve proof that can be verified, while Binance Pegged BUSD is strictly speaking an on-chain behavior of Binance. So should NYDFS/SEC's focus be directed towards Binance, and will USDT/USDC also face the same problem with their corresponding Binance Pegged tokens, Tether/Circle? Or is it just an excuse, and the essence is just a kind of targeting?
Of course, even if it is targeted, it may be related to the initiative of Binance to automatically convert USDC, USDP, and TUSD to BUSD by default in terms of security support for BUSD. After all, with the support of Binance, more scenarios for BUSD may lean towards BNBChain, which may create a misunderstanding that Binance Pegged BUSD, as a packaged asset, is the native asset.
Now let's return to the initial question of "How will the withdrawal of BUSD affect the stablecoin ecosystem of BNBChain?" The answer seems relatively clear - it will provide some boost to the decentralized stablecoin race, but the resulting impact may be limited. Most likely, the demand for these stablecoins will be shared among Binance Pegged USDT/USDC, while the gradual withdrawal of BUSD from the BNBChain ecosystem may be a negative factor. As for concerns about whether Binance Pegged USDT/USDC will face the same regulatory restrictions on "issuance" authorization, these worries can be temporarily set aside. Although Binance is not a compliant custodian like BitGo, the custodian of WBTC, its asset custody reserves are publicly transparent, and regulation should not be so extreme.
Related data links:
Original article link