Secondly, decentralized exchanges (DEX) are now making Stablecoins themselves. This could possibly be a problem for Stablecoin projects, as the main goal of DEX is to offer an easy experience for the user and having multiple products serving a similar purpose might be confusing for new users. A DEX could possibly abstract out the brand and diversify where the users’ money go when they decide to buy a Stablecoin through a DEX.
To better understand this, let’s imagine that you decide to buy a stable pound at Binance, one of the leading DEX today that is also making their own Stablecoin. If you had to choose amongst hundreds of different Stablecoins, then how do you minimize the risk, which gets even harder for new users?
Rather, people may prefer to have Binance do all the work behind the scenes (diversifying amongst top Stablecoin projects) making it easy to use. Unless people feel a strong urge that a specific Stablecoin is worth investing in, they may choose to trust Binance to do the heavy lifting for them.
Although Binance’s original plan is to peg British pound to their Stablecoin, this alternative could work in their favor. Binance will be able to facilitate multiple currencies and become validators across multiple Stablecoin projects.
Binance already invested in Terra and began trading Stably USD on their DEX. As many Stablecoins utilize Proof of Stake protocol, Binance will gain a voice in the governance of the Stablecoin and receive rewards for being a validator. This fee in turn could be used to mitigate any risk by ensuring that there is enough collateral in case one of the Stablecoin project fails.
Hence, for Facebook to win user adoption, it must ensure that users are not too loyal to current Stablecoin projects or have DEX abstract the branding of Stablecoins. By announcing Facebook’s plans, Facebook has set a higher standard for other Stablecoin projects, as one bad experience may have the user leave believing that Facebook could do it better.