Stablecoins are designed to be less volatile than traditional cryptocurrencies.
Stablecoins are very important in the crypto economy. They are cryptocurrencies that are designed to maintain a consistent value by being pegged to a more stable underlying asset, such as a national currency. Many of the most popular stablecoins on the market, in particular, are pegged to the US dollar. Their existence also allows for more digital asset trading on cryptocurrency exchanges, which adds liquidity to the crypto market. Unfortunately, stablecoins do not always behave properly: On May 9, TerraUSD (UST), the third-largest stablecoin, began to violently "de-peg" from the US dollar, trading for as little as 30 cents on the dollar in subsequent days as large blocks of UST were sold, instilling fear. Given the volatility, here are five of the best stablecoins to look into.
1. Dai (DAI)
Dai is a stablecoin powered by the Ethereum-based MakerDAO protocol. Dai, like many stablecoins, is pegged to the US dollar; however, unlike many stablecoins, Dai can also be collateralized, or backed up, by other cryptocurrencies such as Ether, USD Coin (USDC), and others. Dai's price stability as a stablecoin is arguably enhanced by the multi-collateral option, as well as the transparency provided by smart contracts. In the MakerDao community, users can vote for more collateral options. Dai's market cap exceeds $6 billion, making it one of the most valuable stablecoins available to users. www.Makerdao.com
2. Tether (USDT)
Tether is the world's first stablecoin and the most liquid and transacted stablecoin in the cryptocurrency market. With a market cap of around $80 billion, Tether is the largest stablecoin by market cap, ranking third overall behind Bitcoin (BTC) and Ethereum's Ether (ETH). Tether was created in 2014 by Brock Pierce, Craig Sellars, and Reeve Collins under the name Realcoin. The goal of this stablecoin is to keep its value fixed at one to one with the US dollar. Tether, like TerraUSD, lost its peg to the US dollar in May, trading as low as 96 cents rather than 30 cents. Tether's liquidity and widespread use – many crypto exchanges offer USDT as an alternative to fiat currencies so investors can make quick trades – make it one of the top stablecoins, but investors should be aware of the newly discovered risk of de-pegging. Tether claims to be 100% backed by reserves such as cash, cash equivalents, and commercial paper, but has been chastised for a lack of transparency. www.Tether.to
3. Binance USD (BUSD)
The New York State Department of Financial Services has approved BUSD, another US dollar-backed stablecoin. Users can buy BUSD one for one with US dollars. Binance, one of the most popular cryptocurrency exchanges, and Paxos, a regulated blockchain infrastructure platform, collaborated to create BUSD. Binance USD aims to accelerate the flow of digital assets through the global financial network. BUSD is the Binance exchange's native stablecoin, allowing users to easily move in and out of crypto transactions rather than having to wire fiat currency from their online wallet to make crypto trades. www.Binance.com
4. US Dollar Coin (USDC)
USDC, like many of the coins on this stablecoins list, was created in collaboration with cryptocurrency exchange Coinbase Global Inc. (ticker: COIN) and Bitcoin mining company Bitmain Technologies Inc. USDC, which was launched in September 2018, now has a market cap of nearly $50 billion, making it the second-largest stablecoin by that metric. USDC has been used by applications and businesses since its inception and is supported by numerous blockchain networks. Many cryptocurrency exchanges, online wallets, protocols, and other services are incorporating USDC into their platforms to enable global payments. www.Centre.io
5. TrueUSD (TUSD)
TUSD was the first regulated stablecoin that was completely backed by US dollars. TUSD is governed by a set of rules because TrustToken Inc., the exchange that issues TrueUSD, wanted to protect the cryptocurrency industry's trust by rooting out fraudulent and manipulative schemes. As a result, TUSD is a fairly transparent coin. Its market capitalization exceeds $1.1 billion. Cohen & Co., a cryptocurrency audit and tax firm has fully audited TrueUSD's reserves. TrustToken does not charge trading fees on its TUSD coins, which appeals to many investors; however, TrustToken is not fully decentralized, and users are bound to the platform's standards. In other words, regulatory actions on the TrustToken platform will have an impact on TUSD holders. www.Trueusd.com
Is it possible to make money with stablecoin?
Investing in stablecoins allows you to earn money in a variety of ways. It is important to note that simply holding stablecoins will not earn you money because the value is fixed and will not change. You can earn interest on your stablecoins by lending them out through different protocols.
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