The entire crypto ecosystem is in the red zone right now. The Terra (LUNA) ecosystem and its stablecoin UST appear to be the most hit. Analysts are of the opinion that Terra’s minting and burning mechanism contributed majorly to its downfall.
Therefore, amidst the current bearish trends of the entire cryptocurrency space, investors are looking towards BUSD as a replacement for both TerraUSD (UST) and Tether (USDT) stablecoins.
Let’s find out some more reasons why BUSD is currently the go-to stablecoin option today. According to a recent Binance report, stablecoins need to have at least three major features (Regular audits, Regulation, and Top-notch Reserves) to be deemed safe and successful. Interestingly, the BUSD stablecoin can confidently boast of these features.
Even fully-collateralized fiat stablecoins have depegged. Even some of the weak algo stablecoins have recovered.
Some thoughts. 🧵👇
— Emin Gün Sirer🔺 (@el33th4xor) May 10, 2022
Three Reasons Why BUSD is So Successful Nowadays
Stablecoins are supposed to be a source of stability in the ever-volatile crypto space. This, however, cannot be said for all the stablecoins available today. Therefore, one of the most attractive features of the BUSD stablecoin is:
- Its reputation as a regulatory compliant stablecoin option. BUSD also keeps its users within the loop on all its activities, therefore, facilitating transparency. While being backed to fiat is great, BUSD takes it further by offering a stablecoin that is protected and backed by verifiable fiat reserves. It undergoes regular attestation and enjoys the approval of the New York State Department of Financial Services (NYDFS). In conclusion, It is one of the most regulated stablecoin available today.
- Its large extent provides users with sufficient proof of BUSD’s trustlessness. Fiat-backed stablecoins like USDT and algorithmic stablecoins like TerraUSD (UST) cannot boast of such trustlessness. BUSD currently has 96% of its value in cash reserves with the remaining 4% in US treasury bills.
- The importance of transparency. It makes the results of the auditing process transparent and available to the public. This is because a stablecoin is only as good as the reserve it is pegged to. BUSD undergoes a monthly attestation process with the result of these attestations released to the public each month.
The Importance of Fiat Reserve-Backed Stablecoinshttps://t.co/AqswFY3xm3
— CZ 🔶 Binance (@cz_binance) May 11, 2022
Related News About Stablecoin’s Problems
We all know the depeg problem that Tether had in recent days. On Friday the 13th, the stablecoin decreased its value to 0.95. Also, the UST depeg problem exposed vulnerabilities in the Terra Luna ecosystem, causing the bitcoin price to drop to $30,000.
At that moment, people started to swap their USDT and UST for BUSD and USDC. However, important exchanges like Binance decided to pause trading pairs like LUNA/BUSD and UST/BUSD. However, nowadays, Binance decided to re-establish them.
In conclusion, the combination of these three important features; Audits, Regulations, and Reserves helps to prevent the issue of de-pegging from occurring.
⬆️Get $125 for SIGNING UP with MEXC Exchange (FREE $25 in your MEXC wallet + 1-month ACCESS PRO membership (worth $99). MEXC supports U.S. Traders in all trading pairs and services.
To get your ALTCOIN BUZZ ACCESS PRO membership, DM us with your “newly signed up MEXC UID” and “Telegram ID” on our Twitter @altcoinbuzzio)
⬆️For more cryptocurrency news, check out the Altcoin Buzz YouTube channel.
⬆️Find the most undervalued gems, up-to-date research, and NFT buys with Altcoin Buzz Access. Join us for $99 per month now.
