DAI Surpasses BUSD, Becoming The Third-largest Stable Currency

Key Points:

• DAI has taken BUSD’s place to become the 3rd largest stablecoin by market capitalization at the moment.
• BUSD has dropped by around 74% from $16.57 billion at the start of the year, while DAI has dropped by 13% from $5.06 billion at the start of the year.
• BUSD has had a rough February, while the MakerDAO stablecoin is gaining support.

Stablecoins have recently had a position change when BUSD is no longer a stablecoin that has no place for itself. Instead, DAI is currently one of the stablecoins gradually taking over BUSD’s market share.

According to CoinMarketCap data, the current market value of the stable currency BUSD is $4.342 billion, which is somewhat lower than the market value of DAI, which is $4.595 billion.

After USDC, DAI is currently the third biggest stablecoin. Moreover, the market value of BUSD has fallen by about 74% from $16.57 billion at the start of the year, while the market value of DAI has fallen by 13% from $5.06 billion at the start of the year.

More than 2.4 billion stablecoins were redeemed in 30 days, from May 15 to June 16, 2022. Three of the top stablecoins had a 4% to 19% decrease in supply over this time period, compared to the previous month.

The decreasing supply of different tokens in stablecoin projects has become a continuous trend, with large redemptions for USDC, BUSD, and DAI during the previous month.

USDC, the second biggest stablecoin, had its supply shrink by 5.7%, while BUSD saw nearly 19% of its tokens redeemed. Similarly, Makerdao’s DAI stablecoin has dropped 4% since May 15, 2023. Among these variations, two stablecoins stood out by increasing their supply over the previous 30 days: Tether (USDT) and TrueUSD (TUSD).

Binance USD, often known as BUSD, is a dollar-backed stablecoin produced by the blockchain infrastructure platform Paxos Trust Corporation. It is the third biggest stablecoin after USDT and USDC.

Paxos has previously said that the BUSD is completely guaranteed by reserves held in either fiat currency or US Treasury notes. The New York State Department of Financial Services (NYDFS) purportedly approved and regulated BUSD.

Paxos teamed with cryptocurrency exchange Binance in 2019 to develop the stablecoin, which was approved by the NYDFS. According to Binance CEO Changpeng Zhao, the exchange leased the Binance name to Paxos, and BUSD is “wholly owned and managed by Paxos.”

However, the US Securities and Exchange Commission (SEC) issued a Wells notice to Paxos in February – a letter used by the regulator to notify corporations of future enforcement action. According to the notification, BUSD is unregistered security. Because of investor concern with BUSD, its market value has declined since this event.

However, DAI, the stablecoin backed by MakerDAO, the current largest DeFi entity, is the exact opposite.

The MakerDAO community has agreed to increase the DAI savings rate (DSR) from 1% to 3.49%, encouraging investors to hold and lend this stablecoin.

The application of the new interest rate will take effect from June 19. With this change, the cost of collateral to borrow DAI will also increase.

The proposal comes as MakerDAO is revising its DAI stockpile of assets, including adding an additional $1.25 billion to buy US bonds – which are real-world assets and highly secure – during efforts to reduce dependence on traditional stablecoins like USDC or Gemini’s GUSD.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Harold

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