Metaverse Coins Seems to Be More Stable than Actual Stablecoins

Stablecoins

Stablecoins

One asset that’s supposed to remain stable across the crypto ecosystem is stablecoins, but is it?

The crypto economy is known for seismic price fluctuations. Prices of cryptocurrencies and non-fungible tokens (NFTs), blockchain-based digital assets, can swing wildly throughout the day. But the one asset that’s supposed to remain stable across the crypto ecosystem is stablecoins.

Stablecoins are tokens pegged to the value of a government-backed currency such as the US dollar or commodities such as silver or gold. Tether (USDT) and USD Coin (USDC), the two leading stablecoins, assure buyers of their stable value by promising to hold sufficient assets from the traditional financial system to match the value of outstanding tokens: cash, commercial paper, certificates of deposit, and Treasury bills.

Metaverse tokens are vastly outperforming every other crypto category in the current bearish condition, up by nearly 400% year on year.

Leading the gains are Decentraland’s MANA (up 41%), The Sandbox’s SAND (up 470%), Axie Infinity’s Axie Infinity Shards (AXS) (up 511%), and Stepn’s GMT (up 746%), according to data from Kraken Intelligence and CoinGecko’s May 2022 market report. Metaverse tokens can be used to pay fees, buy land and participate in governance.

Stablecoins are now increasingly backed by other cryptocurrency assets and are launching with decentralized organizational structures. With decentralized finance changing the game for investors, anyone with an internet connection can trade in cryptocurrencies without requiring financial middlemen, which is an attractive option for would-be investors disillusioned by the state of the financial world.

Beyond being an attractive option for investment, stablecoins are instrumental for growing the metaverse. There is a need for a unifying currency in the metaverse space, otherwise, different platforms’ economies will remain largely disparate from each other. Stablecoins can do more than provide investors a sense of security in their purchase; they also offer interoperability, liquidity, and a sense of stability, as their name suggests.

Blockchain-based gaming using nonfungible tokens and metaverse platforms has remained tremendously popular throughout 2022. Despite slumping prices across the market, users among those games have remained consistent at about 1 million users per day, according to data from decentralized application tracker DappRadar.

The Kraken report pointed out that although May saw flat daily users, “NFT volume saw a large decrease with daily volume dropping -87.1%.”

Every category tracked by Kraken’s report, including metaverse and exchange tokens, experienced negative returns over the past 30 days and 90 days. Metaverse tokens were among the worst losers over the past 30 days, dropping 42%, with by far the highest volatility at 173%.

Despite the short-term price action, money is pouring in to fund the sector. DAppRadar’s Q1 games report noted that US$2.5 billion was raised in support of blockchain games and metaverse projects in the first quarter of 2022.