Over the last ten years, digital assets have evolved from a single cryptocurrency, Bitcoin, to a variety of other offerings. Nascent crypto industries such as Decentralized Finance (DeFi) are taking market share from legacy financial services and creating decentralized services with novel mechanisms. One of the major downsides of many crypto assets is price volatility against fiat currencies,which makes hedging difficult and spending less attractive. This issue was addressed in 2014 with the launch of Tether’s USDT, a cryptocurrency that claims to be backed 1:1 to the US Dollar (USD). The idea was that because each USDT was backed by an equivalent USD in Tether’s bank account, the cryptocurrency would maintain its price peg to the USD and thus be stable. This was the genesis of stablecoins. Tether currently does upwards of $30b worth of daily transaction volume and is the most traded cryptocurrency. Another reason for Tether’s success is that it allowed exchanges which did not have the regulatory clearance to offer USD markets to provide USDT markets as an alternative.
