Binance, one of the biggest crypto exchanges has announced that it is creating a new unified stablecoin market, according to CCN. Although few details are known, it is certain that USDT will be part of it, as it is the first token on the exchange to see a change related to the announcement.
Binance uses the Unicode symbol for an encircled S to denote a stablecoin, saying about this: “Binance has renamed the USDT Market (USDT) to now be a combined Stablecoin Market (USD(S)). This is to support more trading pairs with different stablecoins offered as a base pair. […] Please note that USD(S) is not a new stablecoin: it is the symbol of Binance’s new stablecoin market.”
How do stablecoins work?
Essentially a steward oversees a bank account holding fiat funds equivalent to the number of tokens sold. There is a trust issue involved, which doesn’t sit well with the ‘trustless’ nature of the blockchain economy. On the other hand, there are benefits with stablecoins; the process of sending deposits from exchanges to bank accounts is shortened, and there is the ability to secure funds in a dollar-denominated currency, when not trading in them, providing a stabilising effect. That is why they are called stablecoins.
The stablecoin sector is growing. It seems that Binance is anticipating growth in this market and expects to see more of them emerging from other fiat systems in Europe, especially the Euro and Asian currencies. It is getting ahead of the curve and ensuring that its users have an advantage when more stablecoins appear and have a working market ready for them.
According to CCN, the major stablecoins at present are: Tether USD, Paxos Standard, and USD Coin. It also suggests that the next one that is likely to appear “belongs to the Ethereum world — the Maker DAO — and it’s quite different in functionality than are the simple paired tokens. Maker has a number of algorithmic functions within it.”