Why Oddz Chose $USDC over Other Stablecoins
If anything can be credited for the rise of crypto and DeFi, it is stablecoins. These USD-pegged assets have been one of the major contributors to the crypto’s growth. Today, they stand at a market valuation of more than $155 billion. In fact, these assets are the sole reason for DeFi’s survival. However, this massive $155 billion dollar industry is divided into different stablecoins. $USDT and $USDC are the market leaders, with a combined market valuation of roughly $124 billion.
The second tier contains $BUSD and $DAI, which have a market worth of around $24 billion. Even stablecoins like TUSD, USDP, USDN, USDD, FEI, GUSD, FRAX, etc have contributed to the industry’s growth. However, when it comes to protocol adoption it has been dominated by $USDT, $USDC, $BUSD, and $DAI. And when it comes to Oddz, we have adopted the $USDC stablecoin.
There are obvious reasons for this, and we want to discuss them in this blog so that you understand why we did not go the non-USDC way.
Let’s dive in!
The Transparency Problem with $USDT
USDT was the first stablecoin to be launched in 2014 as a digital token backed by fiat currency. In fact, it is the largest stablecoin to ever exist with a fully diluted market cap of over $79 billion. It has a circulating supply of more than 70 billion coins and is used in a variety of crypto and DeFi ecosystems. Despite having an enormous market share, it has been lacking the transparency factor.
Tether’s minting and auditing processes are conducted in a “black box” with limited transparency. The company has been constantly changing its financial partners and regulatory jurisdictions, raising doubts about the project’s validity and legal status. It has also been unclear about its investments across several projects, raising more concerns. Even its high percentage backed by commercial papers and certificates of deposits in its reserves has been worrying people.
This non-transparent nature of USDT has made it easily vulnerable to FUD. This has resulted in the currency depegging even during the latest May 2022 crash. The risk is always present since Tether has not been forthcoming about its reserves and audits. As a result, we at Oddz have been remaining cautious by minimizing USDT exposure.
The Low Supply of $BUSD & $DAI
If USDT has transparency issues, why not BUSD or DAI? We have our reasons, and we hope they will convince you as well. Although BUSD and DAI are in a better position than USDT, they are missing a few key criteria. DAI, for instance, is over-collateralized on the Maker platform with a variety of crypto assets. Furthermore, the price of DAI is maintained using smart contracts, which might be risky if exploits are discovered.
There is also a risk when the assets that back DAI experience a significant price drop. With the price of ETH plummeting dramatically in March 2020, MakerDAO considered shutting down DAI. Another problem is the token’s supply, which is now at 6.7 billion, which is far insufficient to be utilized for DeFi activities.
When it comes to BUSD, the coin outperforms both USDT and DAI. It is regulated, FDIC-insured, backed by actual cash and treasury bills, and audited on a regular basis. However, supply is limited, with only roughly 17.5 billion coins in circulation. DeFi is presently valued at roughly $97 billion, with a peak value of $320 billion, and supplying this massive economy with BUSD would be challenging.
$USDC — Higher Transparency and Greater Supply
USDC was our pick, and while this part may appear biased, we’ll give better facts to convince you of our reasons for using USDC. The coin was introduced in 2018, four years after Tether, but it is currently poised to overtake the latter as the world’s largest stablecoin. It is only $25 billion away from Tether becoming the world’s largest stablecoin. And Tether’s lack of transparency will almost certainly propel USDC to the top.
Moreover, USDC is issued and redeemed by CENTRE Network members, unlike other stablecoins that rely on one central authority. Even USDC commercial issuers must comply with licensing, compliance, accounting, and technological and operational standards. They must back all tokens with fiat reserves and provide monthly verification of reserves.
As per US GAAP, Circle now has 100% cash and cash equivalents, which comprise US dollar deposits at banks and short-term, highly liquid assets convertible to established sums of cash with a maturity of less than or equal to 90 days after acquisition. USDC maxies believe that the stablecoin’s focus on cash and cash equivalents demonstrates Circle’s ability to sustain large-scale USDC redemptions in the case of a catastrophe.
All of the above factors indicate that USDC is far superior to USDT. If you prefer BUSD or DAI over USDC, keep in mind that the total supply of USDC exceeds 54.5 billion coins. It outweighs the total supply of both BUSD and DAI combined.
Securing Oddz With USDC
We only intended to cover why we picked USDC, but it would not have been reasonable to everyone. As a result, we’ve informed you of our reasons for avoiding other stablecoins as well. DeFi needs stablecoins to function smoothly and this can be achieved with a transparent and secure coin like USDC. We at Oddz have been supporting USDC from the start to keep our users safe from depegging or other events.
To experience USDC on Oddz:
You can provide liquidity (USDC) here: https://app.oddz.fi/options/strategy
You can trade options (USDC) here: https://app.oddz.fi/options/easy
Oddz is a trustless on-chain options trading platform that expedites the execution of call and put options contracts, conditional trades, and futures. It allows the creation, maintenance, execution, and settlement of trustless option contracts, conditional tokens agreements, and futures contracts in a fast, secure, and flexible manner.
It employs the synergies of Ethereum, Avalanche, Binance Smart Chain, Polkadot, and Polygon to unleash the potential of a decentralized options market. It focuses on building solutions that can propel the DeFi ecosystem by simplifying options trading and enhancing the user experience.