By: Damian Okonkwo
The steady devaluation of the Naira has caused many crypto traders in Nigeria to switch over to using the stablecoins as a means of hedging against the Naira inflations. The survey from traders using Binance crypto which has been the most popular crypto exchange in the country today showed that the number of Crypto traders in Nigeria who have never traded crypto with the exchange but are found holding the stablecoins in their wallet addresses was on a high increase during the Q3 and Q4 of 2022.
The most popular stablecoin used today by Nigerians to hedge against the Naira inflation was USDT. This stablecoin has the same value as the US dollar as it has been pegged to it.
Crypto traders in Nigeria today are now able to convert their Naira into USDT using the Binance P2P platforms today. Binance has further made it possible for Nigerians to deposit into the exchange directly from their bank accounts through the merchants.
The discovery also showed that many Nigerian youths today have formed their own mini crypto exchange companies where they specialize in buying and selling USDT and other stablecoins to beginners who are not yet familiar with using the Binance P2P platforms. These merchants sell at their rates to these buyers which form part of their profits from the business.
Notwithstanding, the fact that the stablecoins have the same value as the US dollar today as they have been pegged to it. Yet it is still very necessary for traders who use the stablecoins to hedge against inflations to understand the risks they are taking as the stablecoins are not backed by laws and can crash in the future when not properly protected. A case study of an instance where the stablecoins crashed recently was seen in the TerraUSD which was depegged from the US dollar causing investors to lose a large amount of their capital.