Binance stablecoin push eats into tether’s market share as BUSD volume surges

Quick Take

  • Binance’s trading volumes are becoming increasingly dominated by its related stablecoin BUSD, taking share from market leader tether.
  • This follows Binance’s recent move to convert some of its users’s stablecoins into BUSD.

Binance's push to promote its BUSD stablecoin is eating into the dominance of market leader tether, with trades against BUSD climbing to a third of all volume on the exchange. 

Trading of BUSD pairs rose to 36% in September and sits at 35% so far this month, according to The Block's Data Dashboard. A year ago, this figure was just 17%. 

BUSD is the main stablecoin on the BNB Chain, a set of two blockchains associated with Binance. It's pegged to the price of the U.S. dollar, unlike the chain's native token BNB, which is free floating.

Thanks to Binance's promotion, the stablecoin now represents a significant force in the trading landscape. While trading in tether (USDT) is still dominant across all exchanges, its share of trading fell to 58% in September while BUSD's climbed to 24%.

At the same time, trading against stablecoins has continued to become more common. While in 2018, trading with bitcoin pairs made up as much as 35% of volume across exchanges, it now represents less than 3%. Similarly, trading against ether makes up less than 1% of such volume.

The rise in trading of BUSD can be partly attributed to Binance's no-fee trading on BUSD trading pairs, which provided an incentive for traders to trade against it. This was amplified by Binance's decision to convert its users's stablecoin holdings — for USDC, USDP and TUSD — into BUSD.

With Binance representing about 74% of crypto exchange trading volume, it's unsurprising that its decisions to prioritize the stablecoin have had a big impact.

The increased demand for BUSD trading has also matched with an increase in its supply. While the stablecoins USDC and USDT have seen their supplies decrease during this year, the supply of BUSD has been steadily growing. Its supply has risen from 14.4 billion at the start of the year to 21.4 billion currently. Despite this, it remains in third place with just half of USDC's supply and only a third of USDT's.

Sam Bankman-Fried, the CEO of rival exchange operator FTX, told The Big Whale in an interview released today that FTX could one day launch its own stablecoin. 

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