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Kaiko Research. Does Binance Push TrueUSD?

The leading information provider about the crypto market, Kaiko, released the report "The Binance Effect" on March 20. The report describes in detail how the exchange's actions affect the growth of the TrueUSD stablecoin and why the TUSD-BTC trading pair has become the most popular.

TUSD and Kaiko logos.

On March 20, a report was released that analyses the impact of Binance, the largest crypto exchange, on the significant increase in the popularity of TUSD and the primacy of stablecoin in a trading pair with BTC.

As we Observed earlier after problems with BUSD's, 130 million TUSD were issued for Binance, which affected the growth of the stablecoin, increasing its market capitalization and raising it to fifth place in the stablecoin rating.

💡 TrueUSD is a stablecoin fully backed by the US dollar. Stablecoin was launched in January 2018 by the TrustToken token creation platform. Stablecoin works on Ethereum, TRON, Avalanche, Polygon and other blockchains. At the time of writing, according to CoinGecko, the market capitalization of TUSD was at the level of $2 billion.

Kaiko analyzed the consequences of the cancellation of zero commission for most spot pairs used in BTC trading, including the most popular ones: BTC-USDT and BTC-BUSD. The cancellation of the zero commission instantly affected the total trading volume of BTC.

Daily BTC volume in 2023.
Daily BTC volume in 2023. Source: Kaiko

However, Binance has retained zero commission for the BTC-TUSD trading pair. In this regard, the BTC trading pair with the TUSD stablecoin became the giant pair, taking over 50% of the total BTC volume on Binance. As the study's author, Conor Ryder, noted, a month before Binance decided to return the commission on some trading pairs, BTC-TUSD had almost zero percent of the total BTC trading volume on the exchange.

BTC market share on Binance.
BTC market share on Binance. Source: Kaiko

But, TrueUSD has not yet been able to capture the primacy in all respects. Despite the increase in TUSD liquidity on the Binance exchange to $10 million at a depth of 1%, it is not yet possible to overtake the BTC-USDT pair in terms of liquidity. This is probably because users still have more confidence in Tether stablecoin.

BTC 1% market depth on Binance.
BTC 1% market depth on Binance. Source: Kaiko

Nevertheless, when studying the liquidity chart of trading pairs of stablecoins with bitcoin, it can be noticed that TUSD has already overtaken the second pair in terms of liquidity with BUSD.

Although the reasons why Binance has become very supportive of TUSD are unknown, the Kaiko specialist believes that TUSD should be considered the best stablecoin in crypto.

“For as long as zero fee trading lasts on BTC-TUSD, TUSD needs to be considered a top stablecoin in crypto, whether people like it or not. Similar to how Binance favored BUSD, TUSD is the benefactor of increased volumes now, even if the reasons why Binance granted TUSD this gift are unclear.”

Why Binance turned to TUSD is a burning question. A colleague of Connor Ryder, Riyad Carey, in an interview for CoinDesk, said that attempts to establish a connection between TUSD and Binance were unsuccessful. According to official documents, there are no public links between the exchange and stablecoin.

“TUSD’s white paper says that TrueCoin, LLC (which does business as TrustToken) is a money service business registered by the Financial Crimes Enforcement Network (FinCEN). That’s well and good, but after some digging it appears that TrustToken isn’t the issuer of TUSD, Archblock is. I’m left wondering why Binance, which is currently being sued by the CFTC, is promoting a stablecoin to which it has no public ties. The lack of transparency makes it hard to tell how much we can trust TUSD, and therein lies the problem,” – said Riyad Carey.

Summing up, Conor Ryder noted that the growing popularity of TUSD can positively impact the crypto market since it ceases to depend on such giants as Tether and Binance.

“A crypto market that is less reliant on Binance is arguably a healthier market. A market that is less reliant on Tether is also arguably healthier too. The problem lies in the replacement, the newly favored stablecoin TUSD, a relatively unheard of stablecoin which has no public ties to Binance. Binance has a lot of power in the market, as evidenced by its latest zero fee move.”

The situation with TUSD is very similar to that with BUSD when Binance brought its stablecoin to the top in a few months. Today we see how TUSD is going up under the influence of the exchange. Why was TUSD chosen to replace BUSD? What is the connection between Binance and this stablecoin? Since the topic is significant, we will continue our Observations and inform you about the news!