The crypto market has a dominant stablecoin, make no mistake.

Tether, which aims to keep its token (called tether or USDT) at parity with the U.S. dollar by backing each token with $1 in bank deposits, accounts for the vast majority of the stablecoin market by total value, exchange volume and other metrics.

But the market has begun to show signs of anxiety around tether, centering on the firm’s access to banking services and its claims to have fully collateralized the outstanding tether supply.

The token has not traded at $1 with any consistency since early October. It hit a low of $0.85 on one market on Oct. 15, and while the exchange rate has largely recovered, it still lags below target, trading at $0.99 Sunday, according to CoinMarketCap.

Meanwhile, several rival stablecoins have arrived on the market, including – just since September – Circle’s USD Coin (USDC), the Paxos Standard Token (PAX) and the Gemini Dollar (GUSD). Older rivals include TrustToken’s TrueUSD (TUSD) and Maker’s Dai (DAI).

As one might expect in such a perfect storm, tether has begun to lose some market share to these competitors in the week and a half since it broke the buck, data analyzed by CoinDesk shows. Yet while TUSD and USDC have made the biggest inroads, the data shows no clear winner at this stage, and tether remains firmly on top.

All these coins are vying for a critical role in the crypto ecosystem. Stablecoins, in theory, allow traders to move money between exchanges quickly – without having to rely on access to traditional banking. They also allow traders to move their funds into a less risky asset during times of heightened volatility, without having to withdraw funds from an exchange.

Below we dive into the data.

Market capitalization

There are several ways to measure market share for stablecoins, none of them perfect indicators. One is simply by looking at the market capitalization, which, when the asset is supposed to trade 1-for-1 with fiat, should be about the same as the overall supply.

“Tether has definitely lost market share in terms of the supply of USD allocated to different stablecoins,” Nic Carter, creator of the blockchain data site Coinmetrics, told CoinDesk. TUSD and USDC, he added, have been “the major beneficiaries.”

Indeed, according to Coinmetrics data analyzed by CoinDesk, tether’s market capitalization as a share of the broader stablecoin market has steadily declined, with most of that decline coming from a reduction in tether supply (a token’s market capitalization is equal to its price multiplied by its total supply).

Charts by Nolan Bauerle and Peter Ryan of CoinDesk Research. Data for all charts sourced from Coinmetrics.io. Note that vertical axis scales differ between charts.

“Prior to the run,” Carter said, referring to a period in mid-October when tether’s exchange rate dipped below $0.93 according to CoinMarketCap, “tether consisted of about 94 percent of the total supply in stablecoins; that collapsed to 83 percent after the run.”

But it’s important not to overstate the competitive implications of that collapse. The primary reason for this shift is that Bitfinex – a cryptocurrency exchange that shares executives and owners with Tether – has sent 780 million USDT to a company-controlled wallet known as the Tether Treasury since Oct. 14.

This process, which the company (controversially) refers to as “redemption,” removes tokens from the supply and therefore reduces the market capitalization, which has fallen to around $1.9 billion from a peak of nearly $2.8 billion in September.

Hence, reductions in tether’s supply haven’t benefited rival stablecoins as much as might be assumed, Carter noted. “It looks like some USDT that were redeemed did not, in fact, flow into other competitors, but simply exited to BTC or fiat.”

Volume

Another way to gauge stablecoin market share is to look at what’s happening at cryptocurrency exchanges.

Unsurprisingly, during and shortly after the “run,” a number of exchanges – including OKEx and Huobi – rushed to list alternatives to tether.

Yet Coinmetrics’ data shows only a slight increase in trading volume for tether alternatives over the course of October, and from a tiny base (note that the vertical axis ranges from 96 percent to 100 percent, and tether remains clearly dominant by this metric):

Coinmetrics exchange volume data is sourced from CoinMarketCap.

“Exchange volume is small for alternatives because traders aren’t really accustomed to them yet,” said Carter, adding “tether still is considered a useful (albeit risky) coin for traders to get fiat-denominated risk. It just has the accumulated financial infrastructure.”

But there’s one more metric to consider: the volume of transactions on the blockchains for these stablecoins.

By this yard stick, tether alternatives have made more headway. Compared to modest on-exchange volumes, total on-chain transaction volumes were considerably higher for non-tether stablecoins throughout the month, and they appear to have increased after tether broke the buck:

All told, tether is still dominant, but competition from its many rivals is heating up.

According to Carter, however, “it’s still too early to say which competitor is best positioned to win long term.”

Tether image via Shutterstock