The research arm of Binance, the world’s largest cryptocurrency exchange in terms of trading volume, has argued that stablecoins will “further become the quote currency” for digital assets in the foreseeable future.
Notably, Binance’s research team believes stablecoins, which are usually pegged 1-to-1 with fiat currencies such as the USD or EUR, will replace Bitcoin (BTC), the flagship cryptocurrency, as “the leading quote currency.”
Binance’s research report, published on May 31, 2019, confirmed that Tether (USDT) remains the dominant stablecoin as other stablecoins are “lagging in terms of trading volume and market capitalization” - which has limited their ability to provide liquidity. In order to remain competitive, stablecoins such as Circle’s USDC have been integrated into several decentralized finance (DeFi) applications including Compound and Dharma.
Ethereum to Remain "Go-to Programmable Blockchain"
As confirmed by researchers at Binance, DeFi apps have become “increasingly popular”, with Ethereum (ETH), the largest smart contract platform, being the “go-to programmable blockchain” for most software architects. Notably, the Binance team has predicted this trend will continue with new cryptocurrency platforms being built on top of the Ethereum protocol.
Binance’s research also mentioned that decentralized applications (dApps) such as prediction markets have “received wide market coverage.” Specifically, the ongoing development of layer-two protocols on top of Augur’s (REP) prediction markets network, such as Veil and AugurLite, indicates there’s a strong demand for such products.
The researchers at Binance also revealed that the “kimchi premium” (the higher prices quoted for cryptoassets on Korean exchanges, compared to foreign markets), which “may exist owing to domestic capital restrictions”, is at “low historical levels.” According to Binance's team, this may be considered a “sign of growing market maturity.”
Permissioned Chains Will Become "Stepping Stones" in Crypto Industry
As noted in Binance’s report, the CME Group recorded an all-time high in cryptoassets traded with over $1 billion in total transactions settled in 24 hours this month. This indicates that institutional investors may be increasing their exposure to cryptocurrencies, the exchange operator’s report stated.
Other key takeaways and observations made in Binance’s extensive 108-page report include:
- Permissioned blockchains such as those of Facebook’s GlobalCoin project and JPMCoin will become the “stepping stones in the blockchain industry”.
- Crypto community members are still concerned about “lack of fungibility” of certain digital assets and miner centralization.
- Binance team expects an increasing number of initial exchange offerings (IEOs) to be launched this year.
- May 2019 was “a much more active month” for over-the-counter (OTC) digital asset trades, particularly a “renewed interest in buyers of BTC/USD.”
- Most traders are interested in “large cap altcoins and we are slowly seeing volumes for smaller cap coins building.”