The USDC announcement has recently increased. How to "transparent" stabilize the business?

In early 2022, USDC is expected to surpass its all-time high of $43 billion. However, the ambiguity of the strategy is that the number of USDC addresses changes more frequently than ever. So how did the situation of heavyweight protesters and disgruntled businessmen come to be? Today in this article we will see.

"Stable" stablecoins li case?

Stablecoins are an integral part of the cryptocurrency ecosystem and can be seen as the bridge between fiat currencies and cryptocurrency-based currencies. Stablecoins allow assets and profits to flow through both the crypto world and the real world of finance. In the "water" of the crypto industry, all kinds of assets are linked and crypto assets are growing.

There are over 200 stablecoins in the world today, with a total value of over $30 billion last year and over $170 billion this year. The rapid growth of crypto-stablecoins reflects growing market demand for stablecoins in times of crisis.

Stablecoin uses the value of the token as a commodity, and the value of the token is fixed with the assets, so the value of the token tends to be stable. Therefore, in the case of stability coins, it is very important to know whether the anchor target exists and whether the target value should be authenticated and stably maintained.

However, in practice, there is a lack of efficiency and proven ways to monitor stable returns due to the demand for “distribution” in the cryptocurrency market. Therefore, stable companies will take steps such as providing clear information and commitments.

For example, Circle's USDC has been providing a clear and easy-to-understand statement since October 2018. The USD statement is held in an escrow account intuitively. This means that for each USDC offer, your Circle number will be charged 1 USD.

Doubts over USDC transparency

However, the Transparency Statement is more of a "commitment" that can be easily changed without any interference from third parties or independent organizations. In March 2020, the Circle USDC added a new statement to its Transparency Report. A US dollar bond held by the USDC was added to the "approved investment".

Circle 2020 Transparency Report

It should be noted that Circle's "approved investments" have no content. This means that as an entrepreneur, there is no way of knowing which agency the estate is registered with, so there is no way of knowing your rights and responsibilities safely.

Although many "investment portfolios" have achieved stable profits, this rapid development is not good for the USDC, first in the "dollar" to gain the confidence of business investors. Meet questions and interview customers, Circle Founder and CEO Jeremy Allaire to avoid all the trouble. Credentials do not guarantee identity and leaders do not talk about it, harming investors and traders with USDC Stability. security issues.

On the other hand, the risk is masked by the opacity of the investment. Compared to other stablecoins that added non-dollar denominations to fixed assets, USDC's "bloom of thorns" also turned off many investors. To date, the USDC has not announced the ratio of US assets to "approved investments". How much money do you have in your account? How much can you afford? What is each percentage? The outside world has no knowledge.

In addition, Circle's Proof of Transparency is subject to change at any time, including in the event of delay. The April 2021 certification was announced on June 9, after a two-month delay, and the May certification on July 16. However, Circle announced more details about its treasure in its July certificate. About 61% of the tokens are recovered from cash and cash equivalents, with Yankee certificates of deposit 13%, US Treasury bills 12% and securities 9%. , the remaining tokens are sponsored by the city and the company. ~

in the clouds of disbelief,Entrepreneurs are not the only ones to be more concerned about the Circle. Coinbase, one of the USDC traders, also changed its presentation of USDC transparency in August 2021.

With the introduction of Coinbase, the original "Backed by US Dollars" was replaced by "Recover from all reserve assets". The caption for this specialty has also been changed to "Each USDC is backed by $1 or the equivalent of fixed assets held in cash with US financial institutions." . "

The constant changes have revived traders' confidence in the USDC, which has also had a negative impact on the market. The lag in the circle of transparency reporting often coincides with the timing of major issues. Closing the link between Circle, USDC and USDC If traders are scared and run away, and Circle and Coinbase do not support quick redemption, Coinbase will cause a lot of price and platform controversy.

What is cycle stability?

Of course, Circle doesn't care about the perception of USDC.

In November 2021, Cricle Founder and CEO Jeremy Allaire responded positively to the Biden administration's recommendations for stable investors. He said the Fed's agreement to keep U.S. dollar coin issuance stable as banks is an important step for the economy. Jeremy Allaire noted that the current phase of revising the current rules is focusing on remittances towards a simpler process that will be "at the heart of the future of the money market. What will economics and investing look like?"

This announcement and cooperation with US regulators shows that both the circle and the USDC have confidence in the compliance and security of their holders and continue to work for the stability of the industry.

However, the flip side is the recognition of self-regulation deviating from the original goal of decentralizing cryptocurrency. For example, in October 2021, Cricle told the governing body that in July it had received a "review" from the SEC for "providing information and data about it, consumers planning and operating." According to the listing, the privacy of USDC consumers is also at risk under the law.

How to strike a balance between respecting security and freedom of expression, and how to attract investors, the USDC still has a long way to go.

Aside from skeptical and skeptical statements about the “middle ground” that holds the rules, stablecoins like USDC that are always on the edge of risk add to the stable stock market.

The risk of owning USDC by the same investors

From the perspective of the average trader, using the USDC trading market carries some risk, and the risks become even greater as these negative commodities enter the DeFi network. For example, in April 2020, Lendf.me's assets of $2,500 were stolen and several companies were implicated with USDC.

These disadvantages are related to the configuration of the USDC token mechanism.

This is because the USDC has added a pre-consent to their token use. When a user converts funds using a USDC contract, they enter the USDC domain name and then access the USDC contract via an internal address. This leads to the fact that the title contract can replace the target name with the rules. The main goal of the developer is to solve the problem of contract reform using regulatory requirements. At the same time, if they have the right to control the contract, protesters can change names that point to an untrusted address - protesters can complete multiple cross-references just against the USDC futures contract and get the rules the low.

Therefore, in the application, previous USDC vulnerabilities and assets are susceptible to theft. If administrators or business owners track down stolen assets and these assets fall into the same pool as modern consumers, these users run the risk of their assets being contaminated with defective products.

Overall, stability coins are the lifeblood of the cryptocurrency market, but at the same time they face several threats: decentralization, regulation, transparency, and security. Although USDC has opened up many green approaches, to foster a stable economy and secure investors' assets, USDC still has a long way to go.