​​Tether could earn more than BlackRock this year…

Ha, baited! Well, it's true though. Ans yes, it's the BlackRock that has $9 trillion in AUM. Tether’s profits surpassed Blackrock’s by 27% in Q1. TLDR 💡 everyone is either too small, or big but dumb & fumbling. Meanwhile, Tether is winning.

​​🧠 [Long Research] Topic: other stablecoins fumbling the bag?

Tether reported $1.48 billion of net profit for the first quarter — more than double its Q4 2022 net profit ($700m). At the same time, BlackRock reported adjusted net income of $1.16bn in the first quarter of 2023 (which is 200 million less than Q4 2022).

Where does the $$ for centralized stablecoin issuers come from?

It comes from treasuries & various lending they engage in. Don't forget, interest rates on USD itself are ~5% now! While YOU use and hold that stable green shitcoin in metaverse, Tether makes real money on you. Keep this in mind for a second, it will be important later.

Tether truthers and USDT reserves

For anyone who says "all their reserves held in BTC, along with it and the profits have increased" - company also said that most of its reserves were held in cash and cash equivalents, with the majority “invested in U.S. Treasury Bills.” Only 1.8% was held in Bitcoin.

BUT! 🚫 Not to sound like tether truthers (who are often right in facts, but wrong in reality) - Tether isn't all that safe. Its profits clearly illustrate that it's NOT 90%+ short-dated treasuries like Circle USDC has. On the contrary, Tether engages in a bunch of private lending, credit, and all other volatile stuff to make money. That is how it can demonstrate abnormal profits, more than if 90% of its reserves were in treasuries. Paolo might say it's all good and safe collateral, but we know how these things can go: creditors, different entities, cascading liquidations, etc.

March exposing the idiots in all of us

During the March crash of USDC, for over 2 days, everyone was in limbo. People were scared, and Circle made no promises or moves to calm anyone down. Mostly because they couldn't do it due to regulatory concerns (and by not having any control over that situation).

Anyway, Circle failed its users. While that's proper behavior, tether always does the opposite: says it's all ok and calms people down. And even though we all pretend to love decentralization and transparency, in times of panic - users appreciated stories and froth... and since then, as a result, USDC token net outflows have surpassed $10 billion since, most of which moved to Tether. USDC supply has fallen from $43B to $27B which is a -37% loss. USDT, on the other hand, went from $70B to $83B, an increase of almost 20% in the same time.

If we talk about the market as a whole, the Total Stablecoins Market Cap is $128.62b. Of which:
- USDT: $83.18b (65.4%) 😟 winning
- USDC: $28.22b (21.9%): fumbling
- DAI: $4.44b (3.4%): fumbling
- BUSD & TUSD: $4.26b & $2.97B: suspicious (!)

I sold a big chunk of USDC at $0.97, put it in treausires, and almost got frozen. GG best trader!

Re-prioritization of stablecoin choices

The March situation and bear market brought out the extremes in people. Some just ignored the non-crypto risks and went into USDT. Some bought LUSD. A bunch of Liquity forks emerged too powered by LSDfi (see the above Crab Notes post). Things got more polarized, basically. The distinction between the “I am a fed” and “destroy banks” got more schizo. And only MakerDAO DAI trying to sit on both chairs at the same time…

While DAI remains the leader in non-fiat stablecoins, its allegiance has been shifting to the centralized side. They are keeping up stETH as a major collateral and trying to fix the USDC PSM, but the Endgame plan fully targets… RWA? That’s something for next time! Stay tuned 👀

Some cool sources on stablecoins:
- https://stablecoins.wtf/
- https://dune.com/steakhouse/stablecoins
- https://dune.com/KARTOD/stablecoins-overview

PS: the pic below doesn't track other chains, whereas Tron has a lot of USDT. So, it's even "worse".