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In the increasingly competitive stablecoin market, where several coins peg their value to the US dollar and other major fiat currencies, it can be difficult to stay on top of all the trading action. From the last 5 years, hundreds of projects have launched as the demand for stablecoins grows steadily.
stableDEX recognizes the major role of stablecoins in the blockchain ecosystem. To serve the rapidly growing crypto community, we are building a relayer for the stablecoin market by providing a decentralized platform to trade in a peer-to-peer trustless manner.
Stablecoin trading pairs are evolving and increasingly gaining popularity among exchanges. The table below highlights just some of the stablecoins listed on the popular exchanges.
This “Stable Coin Market” has increasing liquidity and due to the rapid increase in tradable stablecoins arbitrage opportunities that are becoming available.
Before going deeper into the trading opportunities, we would like to highlight some advantages of the stabledex.io platform over other exchanges.
stabledex.io is an alternative solution that aligns with the original crypto ethos and values of autonomy, security, and privacy. It is a platform that facilitates the peer-to-peer trading of stablecoins from one wallet to another and gives its user an escrow-like service. stabledex.io intends to solve various problems on the current central exchanges, such as:
Whereas these centralized exchanges do business with personal accounts on the central server, stabledex.io protects personal information since transactions are made based on personal wallets. So a user does not need to enter any personal information on the exchange.
Blockchain and cryptos were developed to remove the need for central authorities. But, exchanges like Coinbase, Bittrex, Binance, Kraken and other centralized exchanges contradict this value and put control back into the hands of companies and institutions. stabledex.io removes the need for a third-party to trade stablecoins as it supports transactions between individuals through P2P without a middleman.
Massive security attacks have led to millions of dollars being stolen from popular exchanges because the centralized hot wallets of the exchanges were targeted, which present a single point of failure. In stabledex.io, each user is in private control of their own funds and private keys, so there is no central point of attack.
Low Transaction Fees
Stabledex.io could facilitate cheaper and faster transaction than the above mentioned exchanges since there is no third party authenticator. The trading fee for each transaction would be 0.15% in base currency, which can be reduced further with stableDEX tokens.
One Single Point To Trade Stablecoins
Truth be told there's no single exchange out there that is dedicated to stablecoin trading alone. However, many exchanges offer this as a side option along with bitcoin and altcoin trading. stabledex.io offer support for all the popular stablecoins, including USDT, PAX, TUSD, USDC, DAI Maker, ETH etc.
Slowly and steadily, stablecoins are gaining attention from more traders and investors around the world. These cryptocurrencies have been proving their value since their inception. It's why many crypto enthusiasts are securing cryptocurrencies as their stationary funds, while some people are involved in pure speculation with short-term trading.
Here are some of the advantages of trading stablecoins. There are a variety of different strategies for trading stablecoins thanks to their asset-pegged nature:
1. Price Arbitrage on Different Exchanges
Price arbitrage involves exploiting he price inconsistencies for the same asset on different exchanges. For example, the price of USDC on Coinbase can be different from the price listed on stabledex.io. A trader can profit by buying stablecoins on an exchange trading at a lower price and selling it on another exchange trading at a higher price.
For example: USDC/USDT drops to 0.96 in an exchange. A trader would buy USDC/USDT and sell USDC/USDT at 1.01 in another exchange and make a trading profit of 5 cents excluding trading and transaction fees.
2. “Instability” of stablecoins
While USD stablecoins use different stability mechanisms (fiat-backed, crypto-backed or algorithmic/seigniorage-based), each is designed to mirror the value of a U.S. dollar. But in reality they fluctuate, trading either above or below that figure. In other words, one stablecoin might not be quite as stable - and this opens up several trading opportunities.
3. 1:1 Redemption or minting opportunities
Another Arbitrage opportunity is buying or selling from exchanges and “redeeming or minting” a token with the issuer. The face value of a stable currency known to everyone is 1:1. As soon as the price deviates from the set value, new trading opportunities open up.
Example: the price of a 1 USD asset-backed stablecoin goes up to 1.03 USD on a centralized exchange and you sell some. Right now you want to buy (minting) your tokens from the issuer. Theoretically, they will pay you 1USD per token. Profit +3% excluding trading and transaction fees.
4. Opportunities for bots and algorithmic trading
A swinging market with good liquidity facilitates trading stablecoin-to-stablecoin using bots and algorithms. For example, trading on BitMax Exchange generates around 1.9 million BTMX tokens every day, which makes the exchange attractive revenue for traders using bots on the exchange.
5. Reduce Risk and Build Portfolio
To reduce or minimize the risks, investors generally diversify their investment portfolio to smooth out the effects of unpredictable volatility. Stablecoins are an ideal option if you are looking to keep an all-digital portfolio.
We at stabledex.io believe that each individual will have his own reasons to trade a specific market and a specific pair. We want to share our ideas and hear your thoughts on trading stablecoins.