The recent turmoil in the stablecoin market is not primarily about the cryptocurrencies themselves but revolves around deposits and their associated payment systems. Experts suggest that the core issue lies in where investors place their funds and how returns or interest are paid. Stablecoins, usually pegged to the US dollar or other stable currencies, offer protection against price volatility in the crypto market, but the current focus has shifted toward profit distribution. With the rising popularity of stablecoins, various platforms and protocols have competed to offer higher returns to attract deposits, intensifying competition and making investment decisions more challenging for investors. This profit-driven rivalry poses challenges to financial stability and market transparency. Stablecoins play a critical role as a bridge between traditional finance and digital currencies, but when it comes to profit sharing, the matter extends beyond stablecoins themselves to which platform or bank should provide better returns on deposits. This dynamic affects market balance, investor preferences, and confidence. If this profit competition continues unchecked, it could lead to market instability and risks for some platforms. Investors are advised to exercise caution, considering not just high returns but also financial stability and transparency. Monitoring the development and impact of the stablecoin market has become more important than ever.
Source: coindesk
