Quarterly Mark December 2023 - 81

We point to the crash of Luna and its Terra stablecoin as a significant algorithmic
non collateralized stablecoin event illustrating risks and challenges with this asset.
Private Company Stablecoins
Some large firms are trying to create their own stablecoins that potentially
can replace parts of the existing financial infrastructure if the projects become
successful. The most notable example is Facebook's digital currency, Diem
(previously known as Libra). Diem aims to build a network that enables financial
services for people around the world, including those who are unbanked. This
initiative by Facebook, however, has been viewed with caution by lawmakers and
regulators.
Central Bank Digital Currency
A Central Bank Digital Currency (CBDC) is a blockchain-based token issued by
a central bank to represent a fiat currency. The discussion surrounding CBDCs first
started as cryptocurrencies around the world gained traction, causing a potential
threat to the existing traditional banking system. (See Appendix A for a detailed
breakdown of CBDCs.)
In emerging markets with weaker fiat currencies, cryptocurrencies may pose an
additional threat to the sovereignty of the existing fiat currency, especially as they
become more popular among citizens. Recently, the Nigerian Central Bank banned
cryptocurrencies because of crypto's strength in the country.
PRICE AND VOLUME ANALYSIS
Tether is the most utilized stablecoin in the digital asset market. As of February
19, 2021, the fiat-collateralized stablecoin has a market capitalization north of
$33.7 billion, a 617% increase from $4.7 billion on February 19, 2020. Despite being
the most popular stablecoin, Tether's price still deviates from its $1 peg from time to
time, especially during extreme volatility periods or whenever there is a regulatory
concern pertaining to the stablecoin.
The price data in our analysis and featured in Exhibits 4, 5, and 6 were taken
from January 1, 2020, to February 19, 2021.
Tether Deviations Tend to Stay under 40 Bps
Our analysis shows that Tether price deviation stayed under 40 bps 97.10% of
the time in the past 14 months. This is despite the digital asset market experiencing
record trading activities due to Bitcoin's price appreciation.
VOLUME GROWS ALONG WITH THE INDUSTRY MARKET CAP
Unsurprisingly, Tether volume grew alongside total digital asset market
capitalization, with a significant increase in January 2021 as Bitcoin broke its all-time
high.
DAI's Popularity
DAI, the most popular crypto-collateralized stablecoin, has continued to gain
popularity with multiple exchanges supporting the stablecoin, as shown in Exhibit 9.
Quarterly Mark | 81

Quarterly Mark December 2023

Table of Contents for the Digital Edition of Quarterly Mark December 2023

Quarterly Mark December 2023 - Cover
Quarterly Mark December 2023 - Inside Front Cover
Quarterly Mark December 2023 - 1
Quarterly Mark December 2023 - 2
Quarterly Mark December 2023 - 3
Quarterly Mark December 2023 - 4
Quarterly Mark December 2023 - 5
Quarterly Mark December 2023 - 6
Quarterly Mark December 2023 - 7
Quarterly Mark December 2023 - 8
Quarterly Mark December 2023 - 9
Quarterly Mark December 2023 - 10
Quarterly Mark December 2023 - 11
Quarterly Mark December 2023 - 12
Quarterly Mark December 2023 - 13
Quarterly Mark December 2023 - 14
Quarterly Mark December 2023 - 15
Quarterly Mark December 2023 - 16
Quarterly Mark December 2023 - 17
Quarterly Mark December 2023 - 18
Quarterly Mark December 2023 - 19
Quarterly Mark December 2023 - 20
Quarterly Mark December 2023 - 21
Quarterly Mark December 2023 - 22
Quarterly Mark December 2023 - 23
Quarterly Mark December 2023 - 24
Quarterly Mark December 2023 - 25
Quarterly Mark December 2023 - 26
Quarterly Mark December 2023 - 27
Quarterly Mark December 2023 - 28
Quarterly Mark December 2023 - 29
Quarterly Mark December 2023 - 30
Quarterly Mark December 2023 - 31
Quarterly Mark December 2023 - 32
Quarterly Mark December 2023 - 33
Quarterly Mark December 2023 - 34
Quarterly Mark December 2023 - 35
Quarterly Mark December 2023 - 36
Quarterly Mark December 2023 - 37
Quarterly Mark December 2023 - 38
Quarterly Mark December 2023 - 39
Quarterly Mark December 2023 - 40
Quarterly Mark December 2023 - 41
Quarterly Mark December 2023 - 42
Quarterly Mark December 2023 - 43
Quarterly Mark December 2023 - 44
Quarterly Mark December 2023 - 45
Quarterly Mark December 2023 - 46
Quarterly Mark December 2023 - 47
Quarterly Mark December 2023 - 48
Quarterly Mark December 2023 - 49
Quarterly Mark December 2023 - 50
Quarterly Mark December 2023 - 51
Quarterly Mark December 2023 - 52
Quarterly Mark December 2023 - 53
Quarterly Mark December 2023 - 54
Quarterly Mark December 2023 - 55
Quarterly Mark December 2023 - 56
Quarterly Mark December 2023 - 57
Quarterly Mark December 2023 - 58
Quarterly Mark December 2023 - 59
Quarterly Mark December 2023 - 60
Quarterly Mark December 2023 - 61
Quarterly Mark December 2023 - 62
Quarterly Mark December 2023 - 63
Quarterly Mark December 2023 - 64
Quarterly Mark December 2023 - 65
Quarterly Mark December 2023 - 66
Quarterly Mark December 2023 - 67
Quarterly Mark December 2023 - 68
Quarterly Mark December 2023 - 69
Quarterly Mark December 2023 - 70
Quarterly Mark December 2023 - 71
Quarterly Mark December 2023 - 72
Quarterly Mark December 2023 - 73
Quarterly Mark December 2023 - 74
Quarterly Mark December 2023 - 75
Quarterly Mark December 2023 - 76
Quarterly Mark December 2023 - 77
Quarterly Mark December 2023 - 78
Quarterly Mark December 2023 - 79
Quarterly Mark December 2023 - 80
Quarterly Mark December 2023 - 81
Quarterly Mark December 2023 - 82
Quarterly Mark December 2023 - 83
Quarterly Mark December 2023 - 84
Quarterly Mark December 2023 - 85
Quarterly Mark December 2023 - 86
Quarterly Mark December 2023 - 87
Quarterly Mark December 2023 - 88
Quarterly Mark December 2023 - 89
Quarterly Mark December 2023 - 90
Quarterly Mark December 2023 - 91
Quarterly Mark December 2023 - 92
Quarterly Mark December 2023 - 93
Quarterly Mark December 2023 - 94
Quarterly Mark December 2023 - 95
Quarterly Mark December 2023 - 96
Quarterly Mark December 2023 - 97
Quarterly Mark December 2023 - 98
Quarterly Mark December 2023 - 99
Quarterly Mark December 2023 - 100
Quarterly Mark December 2023 - 101
Quarterly Mark December 2023 - Back Cover
https://www.nxtbookmedia.com