With 147 projects announced throughout the year, 2018 was dubbed the year of stablecoins. This year, the rate of stablecoin announcements has stabilized , with 20 diverse projects announced throughout the first quarter of 2019.
213 is the total number of stablecoin projects announced since 2014 that we have tracked. Of these, 59% are still conducting R&D and not yet trading, 29% are live and 11% are dead due to lack of funding, regulatory issues, or fraudulent behavior.
137 Stablecoins With Collateral Off-Chain
63 stablecoin projects with fiat-collateral (32 are live): Centralized stablecoin projects with cash deposits in a bank, issuing cryptocurrencies at 1:1 for each of their reserves. These so-called bank coins are the most prevalent today given their technical simplicity, which is simply issuing an I.O.U for each dollar minted, and burning them when they are withdrawn. These projects can show transparency through frequent attestations and audits, but these are not infallible and we must learn the lessons of prior frauds, as is suspected with Tether.
We expect to see more pegs to the Euro trading early in 2019 since the only options until recently were STASIS and BitShares, with TrustToken and UniversalProtocol recently announcing their plans for a Euro-pegged stablecoin.
Live projects: 1SG, AirUSD, Anchor USD, ArdorGate, Candy (Mongolian CBDC Tugrik), Carbon Money, Circle / USDC, CK USD (CK Fintech Corp. of Cascadia Blockchain Group)Constant.Money, Cryptopia NZDT, Everex, Fiapay, Gemini Dollar, KRWb, KSB, Monolith, Noku, NOS, Paxos, Roncoin, Stably, Stasis, Stronghold, Tempo, Tether, The White Company, Token, TrueVND, TrustToken, Universal Protocol Alliance, USDO, XCHF
47 stablecoin projects with gold-collateral (9 are live): Centralized stablecoins with gold deposits inside vaults, pegging their value to different measures and types of gold, supposed to be collateralized at least 1:1 with their peg. We believe there may be more than 37 projects announced, many of which have conducted sketchy ICO’s only to disappear without leaving any trace. Be careful, crypto is the wild west, and there is a gold rush for a fool’s money. Furthermore, even though these are “pegged-coins”, their value as a means of exchange and unit of account or onboard ramp is doubtful.
Dead stablecoin projects (total 23):
A majority of the projects that shutdown in the ecosystem were gold-backed, and we are concerned about gold-pegged stablecoins which could be scams — we are reaching out to them and identifying red flags for an upcoming blogpost.
12 stablecoin projects with other commodities as collateral (3 are live): Centralized stablecoins with other metal commodities (not just gold) and even oil. Please note that, just as with gold-pegged stablecoins, the value of these coins as a means of exchange, unit of account or onboard ramp is null unless they are somehow pegged to a major currency (USD, EUR, etc). We believe these projects to be highly speculative and their true deposits may be hard to audit.
Note: We tracked 6 diamond-backed stablecoins claiming to be pegged to a certain index. None of these coins have yet launched and one has already failed. The difficulty of using diamonds as collateral is that their value is not standardized and highly dependent on demand, making it an inefficient model for stability.
5 stablecoin projects with combined collateral (1 is live): Centralized stablecoins backed by an index of major currencies and commodities. Some of these projects peg their value to the IMF’s SDR, while others keep an exchange rate to multiple currencies. Globcoin is the only live project in this category and we expect to see competition increase this year, as it serves a proven and flexible model for the financial structure today.
Live project: Globcoin
4 stablecoin projects with unknown details of their collateral (1 is live): These are projects which have been announced via press releases or blog posts, but for which no white paper or explanation of their stability mechanism exists yet. Therefore, they can fit in any of the categories above. The only live project in this category, Dukasnotes Dukascoins, is from a Swiss bank -we assume it is fiat backed, but have yet to confirm this information.
33 Stablecoins With Collateral On-Chain
33 stablecoins with collateral on-chain (15 are live): An original and thriving category in the stablecoin space, these projects attempt to create decentralized stablecoin models by using collateral existing on the blockchain — and pegging it to a major currency (USD). Most famous among these projects is MakerDAO, collateralized with Ethereum, and issuing stablecoins, DAI, which are pegged to the USD and are fueling the Decentralized Finance (DeFi) movement to speculate on different markets -around 2% of all Ethereum is locked up as collateral in MakerDAO. Other projects of note include BitShares, one of the oldest stablecoins in the market, they are pegged to various metals and currencies, with differing amount of BTS (BitShares core asset) collateral to attempt and maintain parity.
26 Stablecoins With Algorithmic Models
26 algorithmic stablecoins (2 are not dead yet): If stablecoins are the holy grail of cryptocurrencies, then algorithmic stablecoins must be the jewel on the chalice. These models maintain price equilibrium through smart contracts mimicking a central bank seigniorage system, but this requires continual network growth and investment and has proven an elusive goal to non-state actors. For these reasons, as well as lack of regulatory clarity, we have not seen many algorithmic projects launch yet. There are two projects still trading, but they broke their peg and are not sustainable, so they are just “not dead yet”: NuBits, Karbo Coin.
There was hope for a new generation of algorithmic stablecoin with Basis, a project that received over US $130m from known VCs. Unfortunately, that project failed due to lack of regulatory clarity and returned most of the capital raised to investors. But keep watching this space in 2019, although early, there are at least 19 projects working on it.
In terms of demand, the market itself has not varied much, oscillating at around $3bn since July of 2018. It is interesting to note that, from the 62 live stablecoin projects, 29 maintain a peg to the USD. Clearly, the most desired peg among stablecoins is the mighty USD. The US Dollar is not anathema to this cryptocurrency ecosystem.
Consequently, the race we are currently witnessing to dominate that space and take the crown away from Tether, which remains king of the realm.
We believe stablecoins are pivotal to the decentralized economy and, as the ecosystem continues to grow exponentially, CementDAO aims to unify these projects and their stakeholders through a DAO that can pool liquidity and reduce idiosyncratic risks through prediction markets and futarchy. To achieve sustainable growth and avoid the mistakes of the past, stablecoins should trade like apples to apples and oranges to oranges. This would create a strong, fungible and unified front to self-govern and gain mainstream adoption.
Governments and CBDCs (Not on data)
Last year, we tracked at least 20 governments working on a form of cryptocurrency or Central Bank Digital Currency (CBDC), according to the IMF and press reports. This year, according to the BIS’ survey Proceeding With Caution, 70% of 63 central banks surveyed are conducting blockchain R&D. How would non-governmental stablecoins compete against a FedCoin, EuroCoin or YuanCoin? And let’s not talk about the political implications.
Governments should fund this type of R&D and think creatively and cautiously about it, we simply can’t fuck up something of this magnitude. It’s an exciting time to participate in the reinvention of money for a connected world.
To access the full database of stablecoin projects, see here.
If you have any feedback or are interested in the development of stablecoins, please don’t hesitate to reach out. The road to mainstream adoption of cryptocurrencies requires our collective effort, let’s get building!