Since December 15, 2022, the top stablecoins have lost their market capitalization by nearly $3 billion. On December 15th, the stablecoin economy was valued at $141.07 billion. After losing more than $3 billion, the current market cap of stablecoins is $138.07 billion. It fell by 0.02% in the past 24 hrs.
Out of the top ten stablecoins, few lost market capitalization in the past 30 days. On Monday, the market capitalization of USDC was around $43 billion, but in Dec, the valuation was nearly $45 billion. The market cap of the Gemini dollar (GUSD) was around $571 million, down by $20 million in the past 30 days.
In mid-May 2022, the circulation of stablecoins was reduced by nearly $38 billion (USD). Still, $141.07 billion (USD) is in circulation, most of which are Tether, DAI, and Binance. Because of their decentralized structure, stablecoins face issues with deposits, which are not easy to acquire at interest rates, unlike fiat deposits.
NIST wants to regulate stablecoins for better safety and security for users
The US-based National Institute of Standards and Technology (NIST) is working on cryptocurrency regulations. In 2022 NIST announced a draft regulation for stablecoins.
For a better understanding of stablecoin technology and its security-related guidelines, NIST recently prepared a draft to ensure the safety and security of stablecoins. The researchers took 20 stablecoins as samples to examine their value stability. They also added the major components of stablecoins in their report, like their smart contracts, blockchain ledgers, and digital currencies.
The report highlighted that stablecoins are vulnerable to a variety of risks including cyber-attacks, collateral thefts, arbitrary minting, and exploitation of blockchain ledgers. NIST stated that the developers and maintainers of stablecoin have to follow certain regulations towards users and investors to maintain their safety.
The researchers suggested an easier method to regulate the stablecoin which is to peg the stablecoin with fiat so it can be stored and traded on a centralized finance platform. In this research, NIST noticed that out of 20 stablecoins, the top 5 continued their peg at 87%.
The top five stablecoins that retained their peg with 87% are Tether, USD Coin, Binance US, Dai, Frax.
NIST stated that there are loopholes in both Centralized Finance (CeFi) and Decentralized Finance (DeFi). In CeFi, the users must face trust issues due to the high dependency on human trustworthiness. While in DeFi, users face security issues due to increasing cyber-attacks on digital currency.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing
Source: https://www.thecoinrepublic.com/2023/02/02/stablecoins-lost-3-billion-within-44-days/