The latest research from Flipside Crypto aims to refute Tim Draper’s assumption that advances in DeFi will displace the US dollar as the world’s reserve currency.
The report begins by quoting Draper:
„The world of DeFi is almost as technologically advanced as the dollar, and when it is, there will no longer be anyone who wants to accept politically manipulable currencies like the dollar.
The COVID-19 crisis has encouraged and led to the widespread adoption of the crypts
It is not a replacement for fiat
The report focuses on two stablecoins: Dai (DAI) with crypto currency backing and USDC (USDC) with fiat backing. It concludes that users of stablecoins do not seek these instruments as replacements for the dollar, but prefer them because of their resistance to censorship:
„People are not turning to DeFi to replace the dollar. Instead, they are using DeFi to avoid censorship, own their assets and build a financial service without permission.“
Comparing the two currencies, the report concludes that Dai gets more use in DeFi applications, while Coinbase USDC enjoys more traction with centralized exchanges. This is to be expected and is in line with previous research by TokenAnalyst, which also noted that Dai was better integrated into the DeFi ecosystem than either Bitcoin Evolution – Bitcoin Era – Bitcoin Circuit – Bitcoin Revolution – The News Spy – Bitcoin Profit – Bitcoin Billionaire – Bitcoin Code – Immediate Edge – Bitcoin Trader or Tether (USDT).
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Since Coinbase introduced a USDC/DAI trading pair last year, the exchange serves as a connecting node for the two stablecoins.
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While it is clear that stablecoins are far from replacing the US dollar as the dominant global player, it does not necessarily prove Tim Draper wrong. It may be that the DeFi space is still in its infancy, just taking the first painful steps towards a brave new world.