In an unexpected way, the much anticipated “flippening” has arrived in the form of stablecoins now transferring more value each day than BTC. But this is just the beginning of a broader trend of real world assets moving en masse onto blockchains via stablecoins.
“Flippening” Expectations vs Reality:
For the last few years there has been speculation about which crypto currency would supplant BTC for the top spot. Much digital ink has been spilled about why ETH, BCH or some other challenger would soon out perform BTC on a variety of metrics. Ethereum is often cited, as its transaction volumes have long surpassed that of the BTC chain and its dominance among developers is seen as the key to future development of the ecosystem.
However what has happened instead is a different kind of flippening has quietly taken place. While BTC still tops the charts for total market cap, stablecoins led by Tether are now responsible for transferring billions more in value each day than BTC.
While some will credit Bitcoin with Tether’s success as the token was originally issued via the Omni Protocol on top of BTC, in recent months the majority of Tether transfers have taken place via Ethereum’s ERC20 rails, so even based on this metric, one could say the largest daily value transfers are happening via an Ethereum second layer project.
The “Tippening” Has Just Begun
So to coin a new term I’m going to call this the new reality of most blockchain assets being a reflection of real world assets the “Tippening”. Really this is an inevitable sign of our industry maturing. After 10 years of growth the crypto markets are now being used to transport real world assets more than native crypto assets.
To draw a parallel to the early days of the internet, when the web was kicking off from 1991 to 2001 most of the hype and interest was in everything “online”. Internet companies were all swapping ad revenue, mostly serving each others needs. In short it was very insular at first. What emerged after the bubble popped and the hype subsided was a batch of projects all focused on real world applications of the Internet. Amazon on delivering real world goods, Facebook on connecting people who were already friends offline, Airbnb for the rental of homes, Uber / Lyft for car sharing and so on.
We are witnessing the same thing playing out in crypto today. From 2009 to 2019, the story was all about the native crypto assets. The industry was very much turned inward, with the discussion all about how to build better blockchains, how to serve each others needs. In 2017 there were hundreds of ICOs, platforms and exchanges all in service of launching more blockchains, each billed as the solution to some technical limitation of other blockchains.
Many of these protocols have now been built and delivered. Resulting in a buzz word soup of tech marvels including Multi-signature transactions, Cross Chain Atomic Swaps, Zero Knowledge Proofs, Mimble Wimble, Bullet Proofs, Graphene, Schnorr Signatures, Multiparty Compute, bigger blocks, 2nd layer state channels, enterprise focused chains, chains optimized for data, for ordering, for identity and so forth.
So what are we going to do with all this blockchain tech we spent billions of dollars to build and 10 years to code up? The only logical answer is to use it to put all the world’s real world assets on chain. In his great post from last year Kyle Samani laid out the path for putting the first $100 Trillion USD worth of real world assets on chain. Stablecoins will play the first role here but it’s important we do it right.
The Rise of Decentralized Stablecoins
With this tippening of the ecosystem into a new phase of main stream growth, it’s very important that we encourage these Stablecoin assets that all this value is flowing into, actually see the benefits of open & public blockchains. It is not enough that these Stablecoins offer faster and cheaper transfer. They have the opportunity to be 100% audit able on chain, to solve the reserve audit problem, and that they are self issued in order to solve the custody problem.
With this in mind I’m spending a lot of time and energy explaining the new open source PegNet project, which launches October 7th a network of 29 stablecoins representing fiat currencies, metals and crypto currencies. The tech effectively functions as a state channel on top of Ethereum, dedicated to stablecoins prices, conversions and transfers.
PegNet’s new approach of using proof of work price oracles to secure the pegging of all these assets, has fundamentally addressed the core problems with previous Stablecoins, namely the reserve audit and the custody problems.
Call To Action: Join The Revolution
It is worth emphasizing the importance of what is happening here. We can now transfer the most valuable public assets in world onto the blockchain in a way that can be trusted, that has low fess, and unleashes payments and store of value as never seen before.
I’d encourage anyone reading this to considering joining the PegNet community, come ask questions on Discord, become a CPU miner of PEG tokens, research and understand how these decentralized Stablecoins function and consider including them in your next project.
Let’s work together the next 10 years to welcome the rest of the world into the benefits of public and open blockchains.