Because DUSD is almost solely utilized as a trading pair on Binance, it has grown to become the fourth-largest stablecoin by market capitalization.
In spite of this, the stablecoin's dearth of further use cases has kept it comparatively unknown. But that could soon change. The Hong Kong-based stablecoin issuer has big hopes for its stablecoin's future uses after teaming up to issue FDUSD on Sui.
The history of FDUSD starts with a different stablecoin. The primary stablecoin utilized by Binance for pair trading is Binance USD, or BUSD, which was issued by US-based Paxos. The largest cryptocurrency exchange in the world started looking for a new principal stablecoin after Paxos stopped minting BUSD and the Securities and Exchange Commission served a Wells notice in February 2023.
After Binance offered a zero-fee bitcoin trading pair with TUSD, the little-known stablecoin known as TUSD experienced a spike in market value. Users utilizing TUSD might also use its "launchpool" for new tokens.
However, Binance stopped using TUSD in its launch pools and removed it from zero-fee trading promotions for reasons that are yet unknown. TUSD lost its peg in January as a result of a significant sell-off pushed by Binance.
According to CoinGecko, TUSD's market capitalization has dropped from a peak of over $3.8 billion in October to under $500 million.
Let me introduce FDUSD, initially released in mid-2023 by First Digital Labs, a Hong Kong-based company. By August, users were being urged by Binance to switch from BUSD to FDUSD holdings. Since then, FDUSD has assumed the position that was previously occupied by BUSD and momentarily divided between TUSD and FDUSD. With FDUSD, Binance is now providing access to its new token launchpools and its zero-fee trading campaigns.
Prior to the Binance alliance, Digital had a brief stablecoin history. An Asia-focused tech journal claims that in May 2022, First Digital Trust obtained $20 million in Series A funding for digital asset custody from Nogle and Kenetic Capital, almost a year before it started releasing stablecoins.
In 2023, First Digital Trust established First Digital Labs along with the launch of FDUSD. The stablecoin issuer responded to Binance's then-CEO Changpeng Zhao's announcement of FDUSD's introduction in his second-ever X post.
"To launch FDUSD, First Digital and Binance forged a strategic business collaboration." According to a First Digital representative, "Our company operates independently and [shares] no direct board or executive relationships."
First Digital is the digital asset division of the Hong Kong-based Legacy Trust Company, according to Tech in Asia. According to LinkedIn, Vincent Chok serves as CEO of First Digital Trust in addition to Legacy Trust Company.
According to CoinGecko, Binance currently hosts the majority of the FDUSD trading markets, with trading pairings that have benefited from Binance's $0 maker and taker fee promotion accounting for a significant portion of this. However, First Digital Labs, the Hong Kong-based business that created FDUSD, is currently trying to expand.
The layer-1 blockchain Sui said earlier this month that FDUSD will be the first locally minted stablecoin on the network. First Digital CEO Vincent Chok told Blockworks in an interview that the company's goals go beyond that.
Regarding the Binance zero-fee campaign, Chok remarked, "Everything does have an end, of course." "Well, that's just one more reason why I believe we should spread the word about our stablecoin so we can diversify into other exchanges."
According to Chok, First Digital is in talks with layer-2s, is looking into partnerships to use FDUSD for cross-border payments, and plans to launch a payroll relationship with its stablecoin by the end of the year.
He continued by saying that First Digital is interacting with Hong Kong regulators as the city approaches the adoption of its eagerly anticipated stablecoin issuer regulation.
April 2024, Cryptoniteuae