Another upheaval in the stablecoin market
The market of stable coins continues to be in a fever due to the insolvency of a number of projects. Last week, the aUSD was compromised, and this week the HUSD token of the Huobi crypto exchange lost its binding to the US dollar. Against the backdrop of a tough macroeconomic environment, a drop in the capitalization of the crypto market and the bankruptcy of a number of cryptocurrency funds, users are trying to determine the wealthiest stablecoin to save funds.
aUSD – the Acala Network stablecoin – is used in the internetwork applications of the decentralized finance sector (DeFi) and is based on the Polkadot blockchain. aUSD is a decentralized algorithmic stablecoin with redundant collateral. In other words, to get 1 aUSD, the user must block another cryptocurrency for $1.5. If the frozen coins fall in value, a forced reverse conversion occurs. Thus, the necessary reserve is maintained to ensure the binding of the stablecoin to the US dollar.
On August 14, the hacker managed to mint $1.2 billion without using the reserve.
The Acala team quickly discovered the problem and put the network into maintenance mode. This made it possible to calculate the attacker’s addresses and freeze the stolen funds, but also temporarily stopped all operations on the network. Users were left perplexed, as the response speed does not correlate well with the concept of decentralization and the team’s statements about “resistance to censorship”.
As a result of the attack and the decrease in confidence in the project, the volume of blocked funds in Acala has halved in a few days to 191 aUSD and continues to decline. The rate of the stablecoin has not yet recovered.
On August 17, HUSD – the Huobi crypto exchange’s stablecoin (HK:1611) lost its binding to USD. Before the ban on cryptocurrency transactions in 2021, Huobi was the largest operator in China. After that, the company began to pursue a number of failures, revenues sank significantly, and FTX even delisted HUSD.
Unlike aUSD, HUSD’s stablecoin relies on a reserve in fiat. So, in 2021, the issuer Stable Universal reported that each token is backed by $1 in a bank account. Nevertheless, according to the Coingecko portal, at the moment, with a capitalization of $79.1 million, 81.4 million coins are in circulation. And when the HUSD rate fell to 85 cents on August 18, Huobi recognized the existence of a liquidity problem and began to search for its solution.
Against the background of ongoing problems with stablecoins, the issue of the state of reserves of Tether, the market leader, was raised again. Since 1/5 are undisclosed commercial obligations, after the collapse of UST (LUNA), the USDT coin lost 22% of capitalization.
The other day, Tether announced that instead of Moore Cayman, located in the Cayman Islands, in the near future, the largest accounting firm in Europe, BDO Italia, will conduct the certification of reserves. Reports will be provided on a monthly basis, and the share of commercial liabilities in reserves will be reduced to 1/10.
Increasing the transparency of stablecoin No. 1 will add confidence to users in the reliability of the company in this difficult time. In two weeks, the capitalization of Tether has grown by 2.7%.