First Digital USD (FDUSD): A Secure and Transparent Stablecoin
Stablecoins cushion you against volatility in the cryptocurrency market. Over the years, the popularity of stablecoins has risen, with the two dominant ones being Tether (USDT) and USDC (USDC). However, a new stablecoin, First Digital USD (FDUSD), entered the market last year and has been performing remarkably recently with growing market capitalization.
First launched on Ethereum and BNB Chain, FDUSD recently announced its issuance on the Sui network, making FDUSD the first native 1:1 stablecoin on Sui. This strategic alliance led to a remarkable increase in FDUSD's market cap, which stands at $3.85 billion as of May 6, 2024, making it the fourth largest stablecoin in market cap after USDT, USDC and Dai.
Let's take a look at FDUSD and examine its rise in popularity, despite its being relatively new in the crypto market.
Key Takeaways:
First Digital USD (FDUSD) entered the market in 2023 and has been growing remarkably, hitting a market cap of $4 billion as of Apr 30, 2024.
Backed by the U.S. dollar at a 1:1 ratio, FDUSD is issued by First Digital company, a fintech firm governed by laws in Hong Kong.
The FDUSD stablecoin was launched on Ethereum and BNB Chain, and has recently integrated with Sui.
What Is First Digital USD (FDUSD)?
First Digital USD (FDUSD) is a stablecoin launched by a Hong Kong-based trust company, First Digital Trust Limited, to provide an innovative and stable bridge to the global financial landscape. FDUSD is issued by First Digital Limited's subsidiary,FD121 Limited, under the brand name First Digital Labs.It’s backed by cash and cash-equivalent assets to the U.S. dollar at a ratio of 1:1, and its reserve assets are held in accounts by third-party Asian-regulated financial institutions.
Launched in May 2023, FDUSD has grown immensely, particularly following the cessation of BUSD, which had dominated the trading niche on the Binance crypto exchange. This is especially applicable to BTC, ETH and USDT trading pairs, which account for over 90% of the trading volume on the Binance platform.
The CEO of First Digital, Vincent Chok, has shed some light on the critical role that FDUSD is looking to play in the global financial markets by providing better predictability and certainty, especially as traditional financial systems grow increasingly uncertain. The company behind FDUSD, First Digital Trust Limited, has vast experience in providing financial products that bridge the traditional financial world with the digital world in Asia and beyond.
Last year, FDUSD was only available on Ethereum and BNB Chains. However, on Apr 10, 2024, First Digital announced that FDUSD would also be available on Sui, a platform that has been rapidly expanding in the DeFi space.
Use Cases of First Digital USD (FDUSD)
One of the critical roles that FDUSD has played in the stablecoin market is that of providing diversification. As mentioned, the crypto stablecoin market is dominated by USDT and USDC, with USDT commanding over 65% of the total market share. The entry of FDUSD has provided a worthy alternative to the existing options.
Other than this crucial role, other use cases for FDUSD include:
Stability — Similar to other stablecoins, FDUSD provides a cushion for investors in the volatile crypto market. Since it’s pegged to the U.S. dollar, crypto enthusiasts can hedge against instability in crypto prices by holding FDUSD.
Cross-border transactions — You can use FDUSD to send and receive money globally in a fast, reliable and secure manner. Since all of the transactions use blockchain technology, the completion time for a cross-border transaction is short as compared to traditional money transfer services, some of which can take days. Apart from reducing transaction costs, you’re also assured of the security of your financial transactions since all records are kept on-chain.
Hedge against central banks — Traditional currencies are controlled by their respective central banks, which at times can create unfavorable monetary policies, especially during harsh economic times or inflation. However, a stablecoin such as FDUSD is decentralized, and isn’t controlled by any central bank. The lack of intermediaries and external pressure from a central bank makes FDUSD a favorable option for hedging against economic hardship.
Store of value — The crypto market can be highly unpredictable. As a crypto investor, you may opt to store your wealth in the form of FDUSD as you wait for clear market signals. Due to its highly redeemable nature, you can easily convert your FDUSD to your desired crypto asset(s), since its company has adequate reserves.
Is First Digital USD (FDUSD) Safe?
FDUSD is relatively safe. First Digital isa trust company fully registered under the laws of Hong Kong. As a rule, the company is required to hold its FDUSD reserves in segregated accounts, which implies that reserves don't mix with accounts holding other First Digital financial products.
Furthermore, these reserve assets are held in cash or highly liquid assets, ensuring you can quickly redeem your FDUSD for an equivalent amount of U.S. dollars at a 1:1 ratio.
The company's CEO has also emphasized that FDUSD is fully transparent and open to scrutiny, further building trust and legitimacy in the stablecoin.
That said, the safety of FDUSD can't be fully guaranteed, since it runs on third-party blockchains and its accounts are held in custody by a third party. Hence, you need to carry out your due diligence when investing in FDUSD or any other altcoins.
Where to Buy FDUSD
You can buy FDUSD on Bybit through the platform’s Web3 Swap. Simply sign up on Bybit, connect your wallet to the Bybit Web3 Swap portal, and then proceed to swap or bridge your tokens for FDUSD.
First Digital USD (FDUSD) vs. Other Stablecoins
As a new entrant into the stablecoin market, FDUSD has done remarkably well. How does it compare with other stablecoins in the market?
FDUSD vs. USDT
USDT is the earliest stablecoin to enter the market (in 2014), while FDUSD was launched in 2023. In terms of market cap, USDT remains the undisputed king, sitting at $110 billion as of May 6, 2024, as compared to FDUSD’s current market cap of $3.84 billion. This demonstrates that USDT still dominates the stablecoin market, but as mentioned, FDUSD may dilute this dominance and can provide investors with a viable alternative. In terms of blockchains, USDT is available on 14 chains, while FDUSD is currently only available on three.
FDUSD vs. USDC
As an alternative to USDT, crypto enthusiasts have been turning to Circle-based USDC for their stablecoin needs. FDUSD still has a ways to go in order to catch up to USDC, which, with a market cap of $33.48 billion, is the second biggest stablecoin. In addition, USDC is available on 16 different chains.
Closing Thoughts
Despite being among the latest stablecoins to enter the market, FDUSD has managed to capture the attention of crypto investors and enthusiasts. Its growing market cap and increased trade volume point toward a project that could scale further and reduce the dominance of existing stablecoins, provide investors with an alternative way to hedge funds against crypto volatility and offer reduced transaction costs for cross-border remittances. However, stablecoins are still cryptocurrencies with associated risks, so it’s imperative for you to do deeper research before investing in any stablecoin.
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