Decentralization Wins as DAI Overtakes Binance BUSD

With a major crackdown on crypto-focused centralized firms, investors are beginning to opt for decentralized alternatives. Public data confirms this as the decentralized DAI stablecoin has overtaken the Binance-affiliated BUSD stablecoin in market capitalization.

DAI Surpasses BUSD

According to the price-tracking platform CoinMarketCap, DAI overtook BUSD to hold the position of the third-largest stablecoin with a market capitalization of $4.59 billion. By comparison, BUSD currently has a market cap of $4.34 billion. DAI’s current metrics still trail behind Tether USD (USDT) and Circle USD (USDC), which occupy the first and second positions.

Designed by MakerDAO, DAI is a decentralized stablecoin operating on the Ethereum blockchain. It stands out for its unique mechanism of over-collateralization and smart contracts, ensuring price stability without relying on external reserves. DAI’s decentralized nature and ability to maintain a value pegged to the US dollar have made it popular in DeFi applications, lending, and trading.

Its latest uptrend can be attributed to several factors. One of them is an executive vote that was conducted on the MakerDAO governance platform. The vote entails the DAI Savings Rate being increased from 1% to 3.49%, providing more incentives for DAI holders and lenders. The majority of the community supported the idea.

MakerDAO has already made moves to add utility to the DAI stablecoin by investing in real-world assets such as U.S. treasury bonds.

Why is BUSD Decreasing?

BUSD’s decrease is not entirely surprising as the stablecoin has lost the full support of its primary backer, Binance.

Earlier this year, the U.S. Securities and Exchange Commission (SEC) sued Paxos, the company issuing the BUSD stablecoin, over claims that the asset is a security and should be registered with the financial watchdog before being issued to U.S. residents. Paxos succumbed to the regulatory clampdown and agreed to stop issuing BUSD.

Binance, on its part, explored other stablecoins such as TrueUSD (TUSD). Other exchanges like Coinbase have delisted BUSD from their platform.