Tether Accounted for Over 80% of Bitcoin’s Trading Volume as its Premium Dropped

Tether’s USDT stablecoin has seemingly kept on dominating the cryptocurrency trading scene, as Bitcoin to USDT volumes have increased their market share from 70% in February to 81.7% of all BTC trading volume in March.

According to CryptoCompare’s March 2019 Exchange Review, Tether’ USDT has kept on dominating the stablecoin scene as well. This, as data shows 98.7% of Bitcoin’s trading volume against four top stablecoins – USDT, USDC, PAX, and TUSD – was represented by BTC/USDT trading pairs.

While BTC/USD trading pairs dominate the crypto-to-fiat trading volume, even these were dwarfed by BTC/USDT trading. While the monthly trading volume against the US dollar was of about 1 million BTC (around $5.2 billion) in March, against USDT the volume came close to 9 million BTC (nearly $47 billion at press time)

Bitcoin trading volume into fiat or stablecoinsSource: CryptoCompare Exchange Review

The stablecoin’s dominance even over fiat currency trading pairs may be related to a market share increase seen by pure crypto-to-crypto exchanges. These, according to CryptoCompare’s report, saw their volumes increase by 70% since February, to $267 billion. In contrast, exchanges offering fiat pairs saw their volume drop 8% to $58 billion in March.

It’s believed crypto-to-crypto exchanges are faster to see increased activity during market upswings, as cryptoasset capital inflows are faster and easier than fiat currency deposits on more regulated cryptocurrency exchanges.

While available data shows users could be showing increased confidence in Tether’s USDT, things may not be as clear. While several pieces of evidence have suggested the firm does have a dollar in reserve for every USDT in circulation, the company has quietly diluted its USD reserve claims in March.

CryptoCompare’s report shows that, interestingly, bitcoin to USDT trading has mostly grown on exchanges using the controversial Trans-Fee Mining (TFM) revenue model, which has been criticized as being a “disguised ICO.”

FCoin, one of the first cryptocurrency exchanges to adopt the TFM model, has seen its BTC/USDT trading volumes surges last month. CoinBene, as covered, has been the number one cryptocurrency exchange using the model, and seemingly led bitcoin to USDT volumes in March.

USDT trading volumes per cryptocurrency exchangeSource: CryptoCompare Exchange Review

Perhaps related to the increased volume on TFM exchanges is the increase in USDT premiums. Per the report earlier in March the premium got to 3%, meaning it cost an extra 3% to buy one bitcoin with USDT than with USD.

While the premium has since dropped to less than 0.5%, the rise may be traders factoring in the risk of trading in a stablecoin that has diluted its USD reserve claims, and on exchanges that incentivized larger trading volumes through a controversial revenue model.

Error in Time-Locked Bitcoin Contracts Allows for Miner 'Fee-Sniping'

Michael LaVere
  • Crypto researcher 0xb10c discovered an error in bitcoin "time-locked" transactions that could be used as an attack vector.
  • Miners can take advantage of the program to carry out "fee-sniping" and steal funds from one another. 

Users have discovered an error in bitcoin “timelocked” contracts that could potentially allow miners to steal BTC from one another. 

Anonymous crypto engineer 0xb10c reported discovering more than one million “time-locked” transactions made between September 2019 and March 2020. In a post, 0xb10c detailed how these special bitcoin transactions were not being accurately enforced by the network. 

As opposed to normal transactions, time-locked transactions prevent recipient bitcoin from being accessed after sending. Users must wait for a specific number of blocks to be added to the network in ten-minute intervals before gaining control of their bitcoin. 

0xb10c claimed the errant time-locked transactions provided an attack vector for miners to steal transaction fees  from one another via “fee-sniping.” According to the engineer, the backlog of time-locked transactions were being purposefully designed for a “potentially disruptive mining strategy” involving the theft of miner fees. 

In an interview with CoinDesk, 0xb10c said time-locked transactions represented a “low-priority” problem at present that could eventually balloon to involve the wider network. He explained that fee-sniping would become more lucrative in a few years as the majority of miner income shifts towards transaction fees. 

He continued, 

A fix for this has been released in early 2020. However, it will take a while before all instances of the currently deployed software are upgraded.

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