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Holding Stablecoins More Profitable than Fiat in 2022: Report

Stablecoins have mostly been trading at a bit higher against the US dollar since 2017 – with the exception of Tether.

CryptoQuant – a blockchain analytics firm – has released a report assessing the data surrounding stablecoins and their sustainability. It found that holding most current top stablecoins throughout 2022 would be slightly more profitable than holding actual US dollars.

Light Stablecoin Premium

According to the report, the historical average daily closing prices for nearly all of the top stablecoins are slightly above $1, based on volume closing data spanning from 2017.

DAI – an Ethereum-based stablecoin backed by a mix of assets – has an average daily closing price of 40 basis points above $1.00. It proved to hold the highest premium out of all the stables, with USDP and TUSD trading at a premium of 35 and 33 basis points, respectively.

“For traders, $BUSD seems to be the best to hold for the long term because of high closing prices and fewer withdrawals,” CryptoQuant CEO Ki Young Ju tweeted about the data.

However, one coin that is trading at an overall discount over time is Tether (USDT) – the largest stable coin by market capitalization. Tether has also been trading at the highest discount recorded among its competitors – a whopping 4%. Meanwhile, USDC (its top competitor) holds the equivalent record for the highest premium at 4%.

“It should be emphasized that most of Tether’s price deviations below $1 occurred in 2017-2019,” the report clarifies, “and its daily closing price has been stable at almost $1 since 2020.”

The most stable stablecoin?

The report also analyzes skewed patterns of US dollar-pegged stablecoins over time. Specifically, it measures the “Peg Robustness” of each coin — how much its market price deviates from $1.00 from its redemption count.

It found that GUSD is by far the most robust of all the stablecoins. That means its price faces little downside volatility even in a high buyback environment.

Meanwhile, USDT has the lowest durability of all stablecoins. That means its price deviation from $1.00 is high compared to the low buyback cash flow.

As the report explains, a stablecoin is a cryptocurrency designed to hold prices with a relatively stable underlying asset. These typically include fiat currencies but can also include commodities such as gold and other financial assets.

Currently, the most popular stablecoins, including USDT, USDC, and Binance USD (BUSD) are pegged 1:1 to the US dollar. Typically, these coins maintain their fixed rates using a fully backed and highly liquid reserve, for which stablecoin holders can redeem their tokens at any time.

The now defunct TerraUSD (UST) has tried an alternative model whereby the token is backed by LUNA – a highly volatile cryptocurrency. However, this pattern proved unstable under pressure, with both coins crashing to zero in May.

Of the current top 3, both Circle and Paxos have clarified in recent testimonials that their USDC and BUSD reserves are backed entirely by cash and US treasuries. That leaves only Tether to publish a comparable Q2 report.