In the fast-evolving landscape of cryptocurrencies, a newcomer is making waves. FDUSD, a relatively new stablecoin, is shaking up the centralized exchange market, particularly on platforms like Binance. Recent data from Kaiko, a crypto analytics platform, reveals that FDUSD has carved out a market share of 16%, surpassing established players like USDC and DAI. This meteoric rise is more than double the market share of USDC across all centralized exchanges as of October 24.
The Dominance of USDT
While FDUSD is making strides, the reigning champion remains USDT, the world’s most liquid stablecoin. With an impressive market share of 75%, USDT has been a trailblazer since its inception on the Omni Protocol. Its transition to an ERC-20 token on Ethereum further solidified its dominance. USDT is now minted on various chains, including OP Mainnet, Polygon, and Algorand.
The Stablecoin Landscape
In the competitive stablecoin arena, USDC claims a 6% market share, while BUSD and TUSD hold 1% each. MakerDAO’s algorithmic stablecoin, DAI, lags behind with less than 1% market share. According to CoinMarketCap data, the total stablecoin market cap stands at a staggering $124.5 billion, with USDT commanding $84.3 billion and USDC following at $25.2 billion. In contrast, FDUSD, despite its significant market share, boasts a more modest market cap of $479 million.
FDUSD’s Ascent and BUSD’s Decline
The surge in FDUSD’s popularity aligns with a sharp decline in BUSD, previously backed by the Binance brand. In February 2023, the New York Department of Financial Services (NYDFS) ordered Paxos to halt the creation of new BUSD, triggering a downward spiral. BUSD’s market cap has plummeted from $23.6 billion in November 2021 to a mere $2 billion, even lower than the $16 billion recorded in February 2022.
Regulatory Challenges and Binance’s Shift
BUSD’s fall from grace is intrinsically tied to the regulatory challenges faced by Binance, the world’s largest crypto exchange. Regulatory crackdowns, including allegations of listing unregistered securities and violating securities laws, have led to a seismic shift. The SEC’s lawsuit against Binance and its CEO, Changpeng Zhao, further implicated BUSD as an unregistered security.
Kaiko’s assessment highlights the correlation between the rise of FDUSD and the decline of TUSD. In a strategic move, Binance ceased promotion of TUSD in August, favoring FDUSD. A zero-fee campaign for the BTC-FDUSD pair catalyzed a surge in the stablecoin’s trading volume.
The Singular Presence of FDUSD
Notably, FDUSD is currently exclusively listed on Binance, unlike its counterparts such as USDC and TUSD, which are available on over ten crypto exchanges. This singular presence raises questions about FDUSD’s future expansion and its ability to maintain its momentum in the competitive stablecoin market.
In conclusion, FDUSD’s remarkable ascent in centralized exchanges signals a shifting landscape in the stablecoin ecosystem. As regulatory challenges reshape the industry, the battle for market dominance among stablecoins intensifies. The coming months will reveal whether FDUSD can sustain its growth and expand its reach beyond its current stronghold on Binance.
