Stablecoins are an important part of the crypto economy. They are designed to be stable and their value is pegged to an underlying asset that’s also stable such as a national currency. The vast majority of popular stablecoins are pegged to the USD. They bring more digital asset trading on a crypto exchange, which in turn brings more liquidity in the crypto space.
We have curated a list of 5 stablecoins that are the most widely used in the crypto marketplace.
1. Tether (USDT)
Tether was founded by Brock Pierce, Reeve Collins, and Craig Sellars in 2014 and it is the first-ever stablecoin to be launched in the world of crypto. It is the most transacted and liquid stablecoin, as well as the largest stablecoin by market cap, which is around $80 billion. This makes Tether the 3rd largest crypto token behind Bitcoin and Ethereum.
This stablecoin was launched with the goal to keep it pegged to the USD. Tether offers wide usage and liquidity, making it one of the top stablecoins. But, now investors have to be aware of the new risk of de-pegging. This stablecoin claims to be supported by cash reserves, commercial paper, and cash equivalents but is often criticized due to its lack of transparency.
2. Dai (DAI)
Dai is backed by MakerDAO, an Ethereum-based protocol. Dai is pegged to the US dollar, but it can be backed up or collateralized by other crypto tokens such as USD coin (USDC), ETH, and others that can be used as collateral.
This multi-collateral option along with the transparency offered via smart contracts makes Dai reliable as a stablecoin. Dai’s market cap is around 6 billion, making it one of the top stablecoins in the market.
3. Binance USD (BUSD)
BUSD entered the crypto market when Paxos, a regulated blockchain network, and Binance, one of the largest crypto exchanges partnered with the goal of increasing the pace of digital tokens flow through the global financial network. BUSD can be bought 1-to-1 with the US dollar on the Binance exchange, where traders can easily make crypto transactions without using fiat currency from their online wallets.
4. USD Coin (USDC)
USDC, like the others in our list of stablecoins is pegged to the US dollar. Bitmain Technologies Inc., and Coinbase Global Inc., joined forces to launch USDC in 2018. The stablecoin has reached a market cap of $50 billion, making it the second-largest stablecoin out there.
It is used by many businesses and runs several blockchain networks. The majority of online wallets, crypto exchanges, protocols, and other services are incorporating USDC into the platforms to accelerate payments globally.
5. TrueUSD (TUSD)
TUSD is the first regulated stablecoin pegged to the US dollar because the exchange that issues TUSD, TrustToken Inc. wanted to restore the trust of the crypto industry in stablecoins by eradicating manipulative and fraudulent schemes.
Hence, TUSD is a fairly transparent coin. So much so that its reserves are audited by a crypto audit and tax firm, Cohen & Co. It has a market cap of around $1.1 billion and doesn’t charge any trading fees in TUSD coins, enticing many traders/investors. However, TrustToken is not totally decentralized and users have to conform to the standards of the platform.
Risks That Surround Stablecoins
Cryptocurrency, which challenged the traditional finance system, has become a part of this conventional system because of stablecoins. Companies that issue stablecoins have amassed the power of banks but without any audit requirements or licences. As a result, stablecoins are now regulated just like banks as their activity is woven deeply into the financial system.
Their activities are similar to banks and they wonder why any misstep would affect not only the $3 trillion crypto economy but also the wider global economy because companies have hoarded a significant amount of crypto tokens.
Experts believe that stablecoins might be the first cryptocurrencies that are going to be formally regulated. US investors are losing interest in the easy conversion to and from stablecoins. Large stablecoin issuers have to report to income tax authorities, which have to be shown in a taxpayer's year-end tax reports. This means those who earn from trading in crypto have to maintain paperwork for the transactions. However, for the governments, stablecoins have proved to be an experiment with a lot to learn.
The best thing about stablecoins is embedded in their name, ‘stability.’ They are playing a vital role in the mass adoption of cryptocurrencies as they are helping businesses and individuals over their doubts regarding crypto volatility. So, this was our complete list of stablecoins with the best coins available in the crypto market today.