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With Binance’s backing, will FDUSD replicate TUSD’s feat?

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FDUSD traded at a premium to the world’s largest stablecoin USDT briefly on 28 July, reflecting greater demand for the newly-listed asset.

With Binance's backing, will FDUSD replicate TUSD's feat?

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  • FDUSD started with a bang, recording 5 million in hourly trade volumes on the day of the listing.
  • The zero-fee trading program might have contributed to the soaring volume of the coin.

Stablecoin First Digital USD [FDUSD] made an impressive start after getting listed on the Binance exchange earlier this week.

According to digital assets data provider Kaiko, FDUSD traded at a premium to world’s largest stablecoin, Tether [USDT], briefly on 28 July, reflecting greater demand for the newly-listed asset.

Source: Kaiko

Effect of the zero-fee promotion?

The USD-backed stablecoin started with a bang, recording 5 million in hourly trade volumes on the day of the listing. However, as indicated above, volumes have considerably cooled off since then. Consequently, FDUSD’s peg also stabilized at $1.00 at the time of writing, per data from CoinMarketCap.

FDUSD is a 1:1 USD-backed stablecoin issued by Hong Kong-based First Digital Labs. The coin was listed as part of Binance’s now popular zero fee trading program with all spot trading pairs, including FDUSD/USDT, becoming exempt from maker and taker fees.

The exchange fee waive-offs might have contributed to the soaring volume of the coin as highlighted earlier. It should be noted that Binance employed the same promotional strategy to promote another stablecoin, TrueUSD [TUSD].

TUSD’s market cap has more than tripled on a year-to-date (YTD) basis, as per Glassnode.

Source: Glassnode

Binance looks beyond BUSD

Binance’s aggressive backing of newer stablecoins should be seen in the light of the phasing-out stage of Binance USD [BUSD], which once vied for the stablecoin crown with Tether.

Its downfall commenced after a New York-based regulator instructed the issuing company Paxos to halt the minting of new tokens. Since then, Binance has attempted to distance itself from BUSD and is looking to promote other stablecoins.

Will the market achieve parity?

The success of TUSD and FDUSD was imperative to correct the imbalance in the current state of stablecoin market.

At the time of writing, USDT accounted for a massive 66% of the overall market share, having benefitted from the decline of USD Coin [USDC], DAI, and BUSD.

USDT’s dominance could be ascertained by the fact that its market cap was twice as high as the combined market valuation of the next four stablecoins in the list.

Source: Glassnode

FDUSD’s launch was mired in controversy briefly after a popular Twitter user alleged links between Tron [TRX] founder Justin Sun and the custodian First Digital. However, nothing in the public eye as yet to suggest anything of this sort.

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Aniket Verma works as a journalist at AMBCrypto. Contrary to most who are primarily interested in merely tracking price movements of cryptos, his focus is on examining the niche intersection between cryptocurrencies and traditional finance. A so-so Bitcoin maximalist, Aniket has a strong disdain for memecoins and the unfounded frenzy they seem to generate every market season. Coming from a strong engineering background, Aniket previously worked as a Content Manager for TV9 Network. Before his stint over there, he was an Associate Multimedia News Producer at Reuters.
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