Crypto exchanges turn to dollar stablecoins as FX volatility grows
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Cryptocurrency exchanges are stepping up marketing efforts centered on dollar-pegged stablecoins, which have seen rising demand amid a sharp increase in the won-dollar exchange rate, industry officials said Sunday.
While the benchmark KOSPI, along with commodities such as gold and silver, has surged to historic levels, cryptocurrencies have been widely viewed as being left out of the rally, leaving exchanges struggling overall. Against this backdrop, the recent rise in the value of the U.S. dollar has boosted demand for stablecoins, prompting exchanges to capitalize on the trend and increase trading volumes.
Korbit began waiving all trading fees for the dollar-pegged stablecoin USD Coin (USDC) last week. Issued by Circle, USDC is a stablecoin backed by the U.S. dollar, with each token designed to maintain a value of one dollar.
In addition to the fee exemption, Korbit has launched a USDC trading campaign that will run through March. Users who record at least 10 million won ($6,900) in cumulative weekly USDC trading volume are eligible to share a reward pool totaling 25,000 USDC, with allocations varying based on each participant’s trading volume for the week.
Coinone is running a similar promotion, distributing a weekly reward pool of 8,000 USDC among participants according to their trading volumes.
Upbit and Bithumb are turning to the listing of new stablecoins as part of their growth strategies. On Jan. 14, the largest and second-largest cryptocurrency exchanges added USDe, also known as Ethena USD, a synthetic stablecoin created by Ethena Labs. The token is designed to maintain a one-to-one value with the U.S. dollar without relying on traditional banking reserves.
The two firms have also launched a range of related promotional campaigns aimed at increasing trading volumes. Upbit, in particular, has been running a three-round promotion since Jan. 17, offering Ethena tokens to users who rank among the top traders of USDe.
The intensifying marketing push around dollar-pegged stablecoins is largely being driven by the sharp rise in the won-dollar exchange rate. As the exchange rate has moved higher, trading activity in dollar-based stablecoins has increased accordingly.
Data from on-chain analytics provider CryptoQuant show that when the exchange rate exceeded 1,480 won per dollar last Wednesday, trading volume in Tether across the five major won-based exchanges climbed to 378.2 billion won, marking a 62 percent increase from Jan. 1.
“Exchanges are stepping up marketing amid growing interest in dollar-denominated stablecoins, driven by the rising exchange rate,” an official from one of the major exchanges said. “In the current market environment, stablecoins are seen as a way to boost trading volumes and develop new revenue streams during the downturn.”