FDUSD volatily

[GerbertPhills]

I am analyzing the FDUSD volatily and I can see that it always goes up to 1.0030+ when there is a launchpool announced and then dips to 0.9980 areas when it's finished.
 
However, there seem to be other factors that make it go up and down.
 
Since BTC/FDUSD is fee free and BTC/USDT is not, my assumption that perhaps has to do with users accumulating FDUSD for some reason to buy BTC later or leverage it or something like that. But that's just an assumption.
 
Did anyone make a decent research on the topic? 
Couldn't find anything useful on Google about it.

[hugeblack]

You describe it as volatily, but this is how stablecoins work. Stablecoins try to maintain a pegged value, which is $1, but the type of security they support, the demand, supply, and liquidity of the market is what makes it always difficult to get a price of $1, but rather a price range near $1. The narrower this price range is around $1, the more stable the currency is.



This article is good for understanding what I mean ----> https://members.delphidigital.io/reports/your-guide-to-the-collateralized-stablecoin-landscape#stability-and-preference

[Peter90]

I am analyzing the FDUSD volatily and I can see that it always goes up to 1.0030+ when there is a launchpool announced and then dips to 0.9980 areas when it's finished.
 
However, there seem to be other factors that make it go up and down.
 
Since BTC/FDUSD is fee free and BTC/USDT is not, my assumption that perhaps has to do with users accumulating FDUSD for some reason to buy BTC later or leverage it or something like that. But that's just an assumption.
 
Did anyone make a decent research on the topic? 
Couldn't find anything useful on Google about it.

Hi Gerbert
According to my categorisation (see The 6 Types of Stablecoins) FDUSD belongs to the 4th category:
4. Stablecoins backed by financial products

From the article mentioned by HB:
"Those (Stablecoins) backed with more volatile collateral assets were more susceptible to going off-peg, compared to those with more stable assets backing it"

FDUSD is not backed by US dollars but by financial assets.
As the value of the assets backing FDUSD changes, it's normal that the value of the coin changes as well, losing its peg to the $

[hugeblack]

FDUSD is not backed by US dollars but by financial assets.
As the value of the assets backing FDUSD changes, it's normal that the value of the coin changes as well, losing its peg to the $

These financial assets are a form of USD, where instead of there being 1:1 token:USD in stablecoin bank account for each token minted, there are enough assets to liquidate them when there is a shortage of deposits, and these assets are always easy to liquidate, such as treasury bonds and some stocks, so if If any legal problems occur, it may be difficult to sell these assets, leading to big crash.


in short it is still backed by USD.

[GerbertPhills]

Thanks for the explanations, guys.
But in practice the biggest growth of FDUSD is ALWAYS coming from the Launchpool. Since you can stake FDUSD when launchpool is announced users are buying FDUSD to stake it and it brings the price above 1.0030+.

That's one possible reason.

I was wondering if there are others such as this one, EXCEPT external factors that you mentioned..

[hugeblack]

Thanks for the explanations, guys.
But in practice the biggest growth of FDUSD is ALWAYS coming from the Launchpool. Since you can stake FDUSD when launchpool is announced users are buying FDUSD to stake it and it brings the price above 1.0030+.

I agree, I think that after banning BUSD, Binance is trying to make a strong return to the stablecoin market and the best way to do that is Binance Launchpool, as their strategy aims to reduce dependence on USDT and promote FDUSD, so by using this strategy you profit about $15 for every $1,000 invested, but on the other hand, FDUSD You gain more liquidity and grow, and after it becomes big enough Binance will stop giving you these easy profits.
Staking FDUSD may be profitable, but believe me, all similar experiments ended in something bad.

[MrSpasybo]

I agree, I think that after banning BUSD, Binance is trying to make a strong return to the stablecoin market and the best way to do that is Binance Launchpool, as their strategy aims to reduce dependence on USDT and promote FDUSD, so by using this strategy you profit about $15 for every $1,000 invested, but on the other hand, FDUSD You gain more liquidity and grow, and after it becomes big enough Binance will stop giving you these easy profits.
Staking FDUSD may be profitable, but believe me, all similar experiments ended in something bad.

Yeah, following BUSD and TUSD, FDUSD has been selected by Binance for special benefits on Binance including free trading + airdrop in launchpools. Perhaps Binance wants to support First Digital and FDUSD, as well as add more interesting features for Binance CEX users. FDUSD price movements are very stable with a spread of less than 1%, FDUSD reserves are also reported monthly by Prescient, we can all refer to and trust the potential of this new stablecoin.

FDUSD marketcap is currently only around $4.5B, I believe that with the help of Binance, FDUSD marketcap will soon grow as strong as BUSD in the past.

• FDUSD: March 2024 report

[hugeblack]

FDUSD: March 2024 report

I read the report and it seemed exciting, but what caught my attention is that their assets are distributed between cash and US Treasury bonds, without focusing on assets that may increase in value but are difficult to liquidize, such as debts and real estate.
It's good but it will make FDUSD highly centralized and more vulnerable to legal challenges and authorities can easily control it by freezing bank accounts.

[Peter90]

without focusing on assets that may increase in value but are difficult to liquidize

Hi HB

This has nothing to do with liquidity.
Assets that can increase in value are also assets that can decrease in value.
They are not-stable assets.
Backing a currency whose value should be stable (stable-coin) with assets whose value is not stable doesn't make sense.

what caught my attention is that their assets are distributed between cash and US Treasury bonds, without focusing on assets that may increase in value but are difficult to liquidize, such as debts and real estate.

Both US Treasury and fixed deposits are debt:
US Treasuries is debt of the US gov, Fixed deposits is debt of banks.

None of them is cash.
There is no cash backing FDUSD.

[hugeblack]

Both US Treasury and fixed deposits are debt:
US Treasuries is debt of the US gov, Fixed deposits is debt of banks.

None of them is cash.
There is no cash backing FDUSD.

I used to think that what we could call cash is that it is short-term and highly liquid, and therefore commercial papers and treasury bills are considered cash.

[JISAN]

FUSD is not yet as strong as other stable coins USDT, USDC.  And its liquidity is still very low Binance is accepting FUSD for their Launchpad rewards which is why many people are holding it in hopes of getting rewards. as it is a new stable coin, it has not gained much popularity yet. But in future it will become stable. A friend of mine holds FDUSD for Launchpad rewards and converts it back to USDT when Launchpad ends.  Sometimes it is seen that he loses more than the amount of reward he gets due to the price of FDUSD going down.

[Peter90]

Both US Treasury and fixed deposits are debt:
US Treasuries is debt of the US gov, Fixed deposits is debt of banks.

None of them is cash.
There is no cash backing FDUSD.

I used to think that what we could call cash is that it is short-term and highly liquid, and therefore commercial papers and treasury bills are considered cash.

I knew HB 
and of course you are right, according to accounting books rules, short-term + liquid = "cash"


On the other hand:
cash doesn't bear a yield because cash is risk-free.
So where there is yield, that's not cash.

Debt bears yield because of the counterparty risk.
Debt is different from cash.
If you lend 100 yuan to Peter with the agreement that he pays you 5%/year interest and you can ask them back anytime, are those 100 yuan cash to you?
I don't think so 


It's a definition issue, we are both right.



My point is this: many people believe that these $-backed stablecoins are: 1 coin --> 1$ in the bank
So when you say FD$ is backed by cash, many will understand: buy 1 FDUSD = buy 1$
Imo people should know that when they buy FDUSD they are buying US federal debt + US banks debt

[Crypto Library]

Did anyone make a decent research on the topic? 
Couldn't find anything useful on Google about it.

I haven't much researched about the volatility and I have used my $2009 to stake on the Binance launch pool pads for having some extra income from the holding stable fund. But What is interesting here that my $2009 came now $1993 for the volatility. I have also notice that when the Binance laucnpool start the price of FDUSD became uped and after the Laucnpool it came to down. It's true that in term of small amount the volatilities doesn't affect much but in case of good amount it about to see some loss from Stable fund.

[JISAN]

FDUSD is a stable coin of Binance. they delisted BUSD and started pushing FDUSD again. They are keeping FDUSD in addition to BNB staking in their lancepool.  However, it has not yet become strongly stable like USDT or USDC. But since there is a profit behind it, they will do enough work and take various steps to position themselves well. And it is expected to become strongly stable after some time

[|MINER|]

FDUSD is a stable coin of Binance. they delisted BUSD and started pushing FDUSD again. They are keeping FDUSD in addition to BNB staking in their lancepool.  However, it has not yet become strongly stable like USDT or USDC. But since there is a profit behind it, they will do enough work and take various steps to position themselves well. And it is expected to become strongly stable after some time

You are actually right when the money laundering case against Binance came up, they were in trouble with the BUSD stable coin and later they ditched BUSD completely to avoid the money laundering case and launched this FDUSD now.  But I see it sometimes up and down by few cents which is not convenient for stubble coin holders or users.  So if you want to participate in the lunchpool, it is better to hold only these FDUSD coins and later convert them back to USDT.