Stablecoin Wars: Poloniex Eliminates USDC Trading Fees in Bid to Boost Volume

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In case you missed it, Poloniex, one of the major altcoin exchanges, was acquired by Circle in February. Previously, Circle was focused primarily on the major coins versus fiat pairings, but since its acquisition of Poloniex it has had the opportunity to dive into more tokens, and in September it launched its own stablecoin to compete with tether (USDT) and the Gemini Dollar (GUSD), which was launched around the same time. The purpose of “stablecoins” is to help traders denominate their cryptos without creating a crypto-to-fiat event as well as to have coins that are pegged with some degree of certainty to the US dollar.

USD Coin has already been listed for use at Coinbase, one of the largest bitcoin exchanges in the world (owing to the fact that Coinbase is also a founding member of the token’s development consortium), and of course, they immediately put it to work on their new property, Poloniex. Now people wanting to get hold of and trade USD Coin on Poloniex have more incentive to do so, as Circle has decided to stimulate usage by eliminating trading fees for the coin on the Poloniex platform, at least through the end of November.

As CCN reported, Poloniex users are already trading two versions of bitcoin cash for USD Coin. Somewhat ironically, they are also offering to exchange USDC against USDT.

For the present, this means that Poloniex users have two stablecoin options. It is unclear whether Poloniex will list USDT indefinitely, but it has been on the exchange almost since its inception as Poloniex transformed from a major altcoin exchange to a major everything exchange.

At the time of writing, a minor arbitrage opportunity existed between USDC, wherein one could purchase a USDC for $1.00 and buy around $1.01 worth of USDT. Tether is supposed to be exchangeable directly for $1.00 via Bitfinex, so the divergent trading, done in mass quantities, is an opportunity for savvy traders with deep pockets to profit.

According to Circle, over $130 million in USDC are now in circulation, and this number should expand as usage of the token increases. Trading volume, though, has yet to match its market cap, as daily turnover is just $3.4 million.

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Bitcoin Cash: Pre-Fork Trading Doesn’t Bode Well for Craig Wright’s Camp

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Partisans in the looming Bitcoin Cash civil war now have the opportunity to put their money where their mouths are, and that money is quickly piling up on one side of the debate.

Poloniex Opens Pre-Fork BCH Market

Earlier today, cryptocurrency exchange Poloniex became the first crypto trading platform to allow users to trade coins on both sides of the contentious hard fork, which is scheduled to activate on the BCH network on Nov. 15.

From the announcement:

“We believe the responsible thing to do in this case is remain neutral and allow the community to decide which chain to support, and we want to empower the community to demonstrate their support through trading activity. This is the first time we are offering pre-fork trading and it is part of a broader effort to make Poloniex one of the most innovative exchanges in the world. Going forward, we will evaluate each hard fork individually and decide whether to support the fork or to offer pre-fork trading.”

The bitcoin cash price had risen considerably in the lead-up to the fork, as investors clamored to position themselves to receive the “BCH airdrop.” Now, even before the fork activates, they can begin to cash out.

To trade the pre-fork tokens, users must deposit bitcoin cash on the Poloniex platform and then use the conversion tool to split the coins into an equivalent number of “Bitcoin Cash ABC” (BCHABC) and “Bitcoin Cash SV” (BCHSV). Users can also convert back into BCH and withdraw their coins, but for obvious reasons, BCHSV and BCHABC may not be withdrawn until sometime after the fork.

bitcoin cash fork poloniexSource: Poloniex

Initially, each BCH token will trade against bitcoin (BTC) and USD Coin (USDC), the stablecoin backed by Circle, Poloniex’s parent company. Notably absent is tether (USDT), the controversial-but-highly-liquid stablecoin.

Following the fork, Poloniex will support both BCHABC and BCHSV, stating in the announcement that “the responsible thing for an exchange to do is remain neutral.” The firm said that it would manually implement replay protection for withdrawals to prevent attackers from stealing funds from the exchange.

However, such replay protection — which prevents a malicious user from broadcasting a transaction on both sides of the fork — does not exist in the wild, so users should be careful about moving their funds if they intend to hold coins on both sides of the fork. That’s particularly true since SV backer Craig Wright — whose firm, nChain, is leading the development of the SV software — has suggested that SV miners could blacklist certain addresses that spend funds on the ABC chain.

Nov. 15 Bitcoin Cash Hard Fork: a Rundown

According to its development roadmap, Bitcoin Cash hard forks semiannually to ensure that developers have a regular opportunity to introduce new upgrades into the protocol, including those that would render the new software incompatible with previous versions.

These planned hard forks were intended to stave off disagreements about whether and when the cryptocurrency should activate these protocol upgrades, which require all full node operators to upgrade their software to the latest version. Nevertheless, the Nov. 15 hard fork — just the second since BCH forked away from Bitcoin — has been hotly debated, as various development groups have significant disagreements about which upgrades should, and should not, be activated on the network.

One particular subject of contention is the manner in which Bitcoin Cash should accommodate smart contracts and BCH-based crypto tokens. Unable to reach a compromise, two development groups, Bitcoin ABC and Bitcoin SV, have launched competing BCH implementations that will be incompatible once the fork activates on Nov. 15.

Traders Place Their Bets on BCHABC

bitcoin cash hard fork pre-fork betting

While Poloniex’s new trading pairs allow investors early access to their “crypto dividend,” these pre-fork markets are useful for more than just allowing traders and investors to double down on their bets about the outcome of the fork. They also, in the aggregate, provide valuable information about which chain the market believes has more economic viability.

Such pre-fork markets were popular prior to both the original hard fork that split Bitcoin Cash away from the main Bitcoin network last August, as well as the planned SegWit2x fork that failed to activate on Bitcoin last December.

This fork will not activate for a full week, but early returns show that traders are much more confident in BCHABC’s ability to retain its value, at least over the short-term. At present, BCHABC is trading at $535 against USDC, nearly six times above BCHSV, which is priced at just $90.

Notably, the pre-fork tokens are collectively trading at $625, almost $40 above the value of BCH itself, which stands at $587 as of the time of writing. That should change as these markets grow more liquid.

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Dash Price Climbs 13% as Tether Boosts Volume & Payment Service Launches

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Dash on Sunday surged as much as 13 percent against the US Dollar as supposed stablecoin tether (USDT) lost over 4 percent of its value.

The DASH/USD pair closed yesterday at 155.90-fiat while continuing to its slow upside momentum. Today’s Asian session witnessed the pair erasing its recent gains and forming intraday lows towards 152.78-fiat. The green candles began appearing after that, constructing a smooth uptrend in which traders entered longs on higher high formations. It went on until the DASH/USD pair established an intraday high at 172.68-fiat. The trend did endure a pullback, and it is undergoing a near-term bearish correction at the time of this writing.

Tether (USDT) Effect

SOURCE: BINANCE

In the past 24 hours, over 24 percent of the dash trading volume originated from a tether-enabled market, giving a clear picture of traders moving their USDT holdings to altcoins like dash. The stablecoin has lost its peg against the US Dollar once again, now trading 4 cents lower than its supposed valuation.

The crypto market as the whole had witnessed a considerable volume and price surge during the last USDT drop towards 85 cents in Kraken’s USDT/USD market. The present market conditions somewhat point to a repetition of historical price behavior, with top coins undergoing a collective bullish behavior, including cardano, litecoin, and bitcoin cash.

Dash is looking like a safe spot for traders willing to park their unstable USDT holdings to other coins. While the impact appears to have boosted the coin’s market cap from $1.30 billion to $1.42 billion, any correction hereon could balance the upside with an equal downside.

Payment Service Launch in Venezuela

Before the surprising breakout, dash was consistently forming higher highs on its daily charts. The coin closed its regular sessions at $150.71, $153.00, $153.57, $153.86, and $155.58 – from Tuesday throughout Saturday, respectively. The fundamentals around dash were strong already, owing to a new SMS payment service launch in Venezuela. Some people in the South American nation, currently hit with the one of the worst hyperinflation blunders in economic history, are now choosing digital currencies like dash over state-issued bolivars.

Dash Text, as the service is called, caters to all the Venezuelans, especially the ones with no access to the web. It allows them to send and received money represented in dash tokens via SMS.

The previous bullish action in dash markets looks more credible than orchestrated. But, as the coin now heads to close another session, it could soon face threats from the global crypto market factors. Traders who were holding dash so far might want to squeeze out some daily or weekly profits by exiting their long positions, eventually erasing the gains made during the past five days.

A strong level at 148-fiat supports DASH/USD as of the time of writing.

Featured Image from Shutterstock. Charts from TradingView.

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