Let's talk about why exchanges are the key players in the stablecoin battle, especially in light of Circle's IPO. At the same time, the reserves of stablecoins are also the decisive factor for exchanges.
The leading exchange Binance and the leading stablecoin Tether both have annual revenues exceeding 10 billion USD.
➤ Why are exchanges the key players in the stablecoin battle?
1. The key to stablecoin issuance volume.
Exchanges are the primary venues for stablecoin trading, and their trading volume and activity directly impact the circulation of stablecoins. According to Circle's prospectus, by March 2025, the circulation of USDC will exceed 60 billion USD. The growth of stablecoin circulation is closely related to the promotion and support of exchanges. For example, Circle partnered with Binance, allowing USDC to participate in Launchpad mining. Circle paid Binance a one-time fee of 60.25 million USD, increasing the USDC supply on the Binance platform from less than 1 billion USD to 4 billion USD, significantly boosting USDC circulation. Coinbase has always been a major partner of Circle, with USDC reserves on Coinbase accounting for about 23% of USDC's total circulation, roughly 13 billion USDC.
However, Tether (USDT) holds up to 70% market share in centralized exchanges. The strong market position of USDT is also due to its support from Binance, which started with cryptocurrency trading pairs related to USDT, making it a major trading pair across almost all exchanges, with a huge trading volume gradually growing into an irreplaceable giant.
2. Determining the market share of stablecoins.
The level of support for stablecoins by different exchanges will directly affect their market share. Taking USDT and USDC as examples, there are differences in market share across various exchanges. In some mainstream exchanges, like Binance and Coinbase, there are abundant trading pairs for stablecoins, but the main trading pairs still primarily consist of USDT.
In Europe, due to regulatory restrictions, Coinbase will delist USDT by the end of the year, leading to a decline in USDT's market share in Europe, while the market share of regulated dollar stablecoins like USDC will increase.
3. Stablecoins are the most important asset for exchanges.
Exchanges have large user bases, and stablecoins are a very important component. Binance's total reserves amount to 110 billion USD, and aside from BTC reserves, its largest stablecoin reserve reaches 31 billion USD.
At the same time, Binance has maintained zero trading fees for stablecoin transactions, and withdrawing stablecoins on the BSC chain is completely free, both of which are very important reasons.
➤ Stablecoins are the key factor for exchanges.
1. The stablecoin reserves of exchanges = Industry position.
The reserves of stablecoins are the foundation of their value stability. For exchanges, trading stablecoins can ensure their stability. If stablecoin reserves are insufficient, it may lead to price fluctuations, affecting trading order and user confidence on the exchange. The scale of stablecoins and fund reserves generally represents the exchange's position in the industry and is positively correlated with market share. Binance accounts for 59% of the total market stablecoin reserves, aligning closely with market share, while Coinbase leads with reserve assets of 129 billion USD, accounting for 32%, followed by Binance with 110 billion USD, and Bitfinex, being the parent company of USDT, also holds a significant position.
2. Stablecoins are the most crucial component for exchanges.
All important operations within the exchange rely on stablecoins—trading, investment, lending, payments, derivatives, etc. Without stablecoins, operations cannot function.
The exchange's ecosystem (such as investment, staking, payments, etc.) deeply integrates the supported stablecoins. For example, Binance can significantly guide fund flows towards specific stablecoins by providing incentives in its products like Launchpool. As the use of a stablecoin within the exchange ecosystem broadens, its scale increases, turnover becomes more frequent, and the exchange's profits grow.
3. More liquidity and security.
Having more stablecoin reserves means better trading depth and increased security. Huge liquidity provides a smooth trading experience, attracting more users to choose that exchange for trading.
With platform transparency and financial strength, institutions and whales are willing to deposit large amounts of funds here, mostly in stablecoins, allowing for seamless withdrawals, which is crucial during key market events.
➤ Summary
Exchanges are the key players in the stablecoin battle, influencing the circulation, market share, and user base of stablecoins, determining their competitive position in the market.
At the same time, the reserves of stablecoins are also a decisive factor for exchanges, ensuring their stability, enhancing their competitiveness, and meeting diverse user needs. The broader the use of stablecoins within the exchange ecosystem, the larger their scale, the more frequent their turnover, and the greater the profits for the exchange. ➤ Stablecoins are the key factor for exchanges. 1. The stablecoin reserves of exchanges = Industry position. The reserves of stablecoins are the foundation of their value stability. For exchanges, trading stablecoins can ensure their stability. If stablecoin reserves are insufficient, it may lead to price fluctuations, affecting trading order and user confidence on the exchange. The scale of stablecoins and fund reserves generally represents the exchange's position in the industry and is positively correlated with market share. Binance accounts for 59% of the total market stablecoin reserves, aligning closely with market share, while Coinbase leads with reserve assets of 129 billion USD, accounting for 32%, followed by Binance with 110 billion USD, and Bitfinex, being the parent company of USDT, also holds a significant position.
2. Stablecoins are the most crucial component for exchanges. All important operations within the exchange rely on stablecoins—trading, investment, lending, payments, derivatives, etc. Without stablecoins, operations cannot function. The exchange's ecosystem (such as investment, staking, payments, etc.) deeply integrates the supported stablecoins. For example, Binance can significantly guide fund flows towards specific stablecoins by providing incentives in its products like Launchpool. As the use of a stablecoin within the exchange ecosystem broadens, its scale increases, turnover becomes more frequent, and the exchange's profits grow. 3. More liquidity and security. Having more stablecoin reserves means better trading depth and increased security. Huge liquidity provides a smooth trading experience, attracting more users to choose that exchange for trading.
With platform transparency and financial strength, institutions and whales are willing to deposit large amounts of funds here, mostly in stablecoins, allowing for seamless withdrawals, which is crucial during key market events. ➤ Summary Exchanges are the key players in the stablecoin battle, influencing the circulation, market share, and user base of stablecoins, determining their competitive position in the market. At the same time, the reserves of stablecoins are also a decisive factor for exchanges, ensuring their stability, enhancing their competitiveness, and meeting diverse user needs. The broader the use of stablecoins within the exchange ecosystem, the larger their scale, the more frequent their turnover, and the greater the profits for the exchange.
