The cryptocurrency market is continually expanding as more crypto assets are being developed.
Most of these cryptocurrencies are backed by fiat currencies, mostly the USD, and this has led to the saturation of the market and the funds in it.
Zhao Dong, a shareholder on Bitfinex, said that Tether is planning on the release of coins backed by commodities such as rubber, crude oil, and gold.
The stablecoin developer is making these plans in a bid to circumvent the challenges that have developed due to market saturation.
Fiat pegged stablecoins
Stablecoins pegged against fiat currencies have filled the crypto market. There are a variety of these stablecoins, and different leading fiat currencies back them.
Dong previously announced that Tether would release a Yuan pegged stablecoin which turned out to be true.
Fiat pegged stablecoins became a central part of the market during the bear market in 2018. During this time, the crypto market suffered a variety of crashes, and there was high volatility in markets around the world.
The stablecoin market is now highly saturated, and the competition in it has intensified over the last few months.
With companies such as Facebook planning on releasing their own coins, it increases the competition on the market and places several stablecoins in an awkward position.
The online crypto trading industry will benefit from having a variety of stablecoins available on the market.
According to Dong, Tether is concerned about the possible overextension of the USDT coin. The coin has a capitalization of $4 billion, and it forms about 80% of the stablecoin market as a whole.
He went on to say that Tether plans to stop the capitalization once USDT reaches the $5 billion mark, and hence, they are looking at commodities as an alternative for the backing of the coin. Other fiat currencies are also being considered as alternatives to the USD as was the case in the making of the Yuan backed coin.
Bulk commodity-backed coins
Commodity backed stablecoins would bring a different twist to how cryptocurrencies perform on the markets. Commodities are more stable than most fiat currencies, and they would provide the stable coins they back with a solid foothold.
Dong has proven to be a source of accurate information in the past, and his statements about Tether’s intentions are likely to be accurate.
Traders that buy Tether are likely to find the development of commodity-backed coins interesting as there are high chances of valuable stablecoins appearing on the market.