Hello everyone...
Stablecoins are like the gasoline that moves the cryptomarket and are indispensable in most cases to perform buying and selling operations, they are also tokens easy to use or relate to for the vast majority of users as they are associated with the value of a Fiat coin, Although there are also stablecoins that are not associated with any other currency, but are controlled by algorithms to maintain a stable price. The main motivation for creating stablecoins is to try to provide investors with a safe haven in times of volatility.
That is why it is not surprising that there are stablecoins in the ranking of the top coins by market capitalization, with USDT (3) and USDC (5) being at the top of the list.
But a big problem with these top two coins USDT and USDC, is that both are totally centralized and both do not have a totally clear support or basis. For example, the value of a stablecoins is determined by its dollar reserve, i.e. if USDT has $100 in coins circulating, it should have $100 in Fiat dollars stored or in locked value for USDT to have real value.
But this is somewhat unclear, since of the $82,750,973,248 of USDT in circulation, about 10% is in reserve cash and bank deposits, and the other percentage of reserve is miscellaneous, although it is not very clear what assets specifically they are. And the same problem faces USDC.
This is why the big solution to this problem is a stablecoin that is fully transparent and also gains the trust of buyers, and that is where algorithmic stablecoins solve this, as they are coins that to be created you must burn the same amount in other cryptocurrencies, for example, Terra offers UST and to get it you must burn $1: $1 of LUNA.
And as these algorithmic stablecoins have a greater acceptance due to their great transparency, they are having a huge demand, and that is why a few hours ago the market capitalization of UST surpassed that of BUSD and positioned itself as the third stablecoin in the market. Right now UST's market cap is valued at $17,561,667,979 while BUSD's is valued at $17,388,309,591.
And this increase is seen since October 2021 but was most strongly felt since this 2022, in fact, The Terra protocol stablecoin led the increase in market value of stablecoins, with more than 60% increase during the first quarter of this year.
UST's recent growth also comes on the back of increased user confidence and interest, and although some attribute much of TerraUSD's steep rise to the Luna Foundation's policy of bitcoin reserves. One can note the great boom that algorithmic currencies can have by offering security.
In addition, it is possible to soon see UST's market cap value continue to rise as bitcoin reserves Luna Foundation plans to increase the bitcoin reserves stake to about $10 billion.
And the HBD?
This boom for UST may directly or indirectly benefit HBD, as both coins have the same token-burning protocol to produce and also both coins have ambitious plans to continue their growth.
For example, UST is backed by a lot of bitcoin in reserve and this will attract more users to burn LUNA to produce UST, and in the case of HBD the increase of interest up to 20% makes many users want to burn more Hive to produce due to a scarce liquidity.
Also, with these big HBD plans also comes ambitious projects as is the case with @leofinance and their proposed pHBD-USDC, which will be a polygon liquidity vault with which you can instantly get HBD as they plan to create a $5 million liquidity with an eye on further growth. And I also read about a @threespeak development of HBD Partial Insurance with BTC - Proposal to Print 1M USD of Hive.
, which will also bring a lot of attention to Hive and HBD as a saber currency.
So right now we are seeing huge developments around cryptocurrencies as misconceptions are being put aside and adapting to a better handling of things, let's hope that the Hive network and HBD will come out very well from this very excellent situation.