With crypto investors increasingly looking to minimize risk while combating inflation, stablecoins have emerged as one of the most popular choices. Stablecoins are cryptocurrencies pegged to the value of an external asset.
Both USD Coin and Tether are pegged to the U.S. dollar and issued on multiple blockchains, such as Ethereum (ETH) and Solana (SOL). But Tether and USD Coin are not perfect substitutes for the U.S. dollar since they can’t be deposited into a bank account and are largely not accepted by businesses.
In the current bear market, USD Coin and Tether are stuck while Snowfall Protocol (SNW) is soaring. Why is Snowfall Protocol (SNW) leaving behind stablecoins like USD Coin and Tether? Let’s find out.
The Lagging USD Coin
USD Coin (USDC) has a total market capitalization of $65 billion and a 24-hour trading volume of $8.14 billion as of May 2022. While USD Coin (USDC) is catching up to Tether in terms of market capitalization, it still lags well behind it in terms of trading volume. It’s currently the 2nd biggest stablecoin and 4th biggest cryptocurrency by market capitalization. However, USD Coin (USDC) has been suffering from high volatility.
USDC coin’s (USDC) value depends upon the performance of the Ethereum network. So depending on the current state of the Ethereum network, transaction fees can be high, and fees for withdrawing USD Coin (USDC) from exchanges can also be high. All these operational issues have worsened its drop in the bearish market.
Lack of Clarity From Tether
According to Tether, whenever it issues new Tether tokens, it allocates the same amount of USD to its reserves, thus ensuring that Tether is fully backed by cash and cash equivalents. However, over the years, there have been several controversies regarding the validity of Tether’s claims about their USD reserves. It has led to significant disruptions in Tether’s price, which went down to as low as $0.88.
Many investors have raised concerns that Tether’s reserves have never been fully audited by an independent third party. Tether has been the target of a lot of FUD due to its murky balance sheet and lack of a public audit. Tether has repeatedly been fined for misleading statements around the state of its books. After Tether released the first breakdown of its balances, it came under even more scrutiny from regulators over its claims that all issued stablecoins are fully backed by dollar reserves. Even though a report supposedly cleared Tether from any allegations of wrongdoing, doubts remain. The company has been in repeated spats over its business practices.
There are accusations that Tether (USDT) has been used to manipulate the price of Bitcoin (BTC). Tether (USDT) is not divisible, which limits its functionality.
Snowfall’s Race to the Top
Snowfall Protocol (SNW) is an ecosystem for cross-chain token transfers. It strives to make multi-chain compatibility a reality by developing a compatibility bridge. Snowfall Protocol (SNW) differentiates itself from its competitors by speeding up and simplifying token swaps, staking, yielding, and cross-chain asset transfers for Snowfall users. The recent presale campaign of Snowfall Protocol (SNW) created waves in the cryptocurrency world. The presale was completed within seconds of its launch. The current price of Snowfall Protocol (SNW) is around $0.060, up massively from its presale price of $0.005.
Due to its cross-chain token transferability, Snowfall Protocol (SNW) is whipping past other cryptocurrencies in terms of market cap and daily trade volume, leaving behind stablecoins like USD coin (USDC) and Tether (USDT).
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