As the crypto-industry evolved in 2015, a new format of electronic finance emerged – stablecoins.
Stablecoin is a type of cryptocurrency with a fixed value. (In a sense, this is a replacement for fiat, which is tied to one dollar rate).
Anything can act as an underlying asset for stablecoin: fiat money, cryptocurrency, real goods, or even commodities.
More often than not, stablecoins are tied to dollars. That is, 1 stablecoin always equals $1.
The advantages of stablecoins are:
- Fast and cheap transactions.
- Protection from cryptocurrency volatility.
- Fixing profits.
- Flexibility in trading.
- Tether (USDT)
- USD Coin
- Binance USD (BUSD)
- Pax Dollar
- True USD
- Neutrino USD
- Fei Protocol
- stasis EURS
Top 5 Stablecoins
The first, best stablecoin was released in 2015 by Tether Limited.USDT exchange rate is fixed and pegged to the dollar - 1 USDT = $1. The tether can be bought, exchanged, spent, and transferred just like any other cryptocurrency. It is often used to fix value.
Since Tether (USDT) is the most popular company's token, it is understood to be Tether by default.
Tether (USDT) blockchains: Tron; Ethereum; BSC; EOS and more than 10 other blockchains (The most popular protocol is TRON. It has no fees and fast transactions).
Value support: reserves are in bank accounts and other assets.
Year of appearance: 2015 (First Stablecoin).
USD Coin is the second largest and market capitalization stablecoin. It has high transparency and liquidity. The company publishes audits every month to give people more confidence that the coins are fully secured.
USDC is issued by issuer Circle (NYDFS licensed and regulated company). It also partners with the Coinbase exchange. This Stablecoin is traded on many cryptocurrency exchanges.
USD Coin blockchains: Ethereum; Solana.
Value support: fiat currency in bank accounts.
Year of issue: 2018.
BINANCE USD (BUSD)
Binance USD is one of the most popular regulated stablecoins. The coin is fully collateralized in USD, giving the opportunity to protect the cryptocurrency from high volatility, and to use fast ways of financing. Binance USD is fully approved and regulated by the New York Department of Financial Services.
Users are not required to pay a fee when creating and redeeming BUSD. Stablecoin is traded on many exchanges.
Blockchain: Ethereum; BSC; Harmony.
Value Support: Fiat currency (dollars) held in banks in America.
Year of issue: 2019.
DAI is another stablecoin pegged to the U.S. dollar and is launched only on the Ethereum blockchain. This stablecoin is managed and maintained by the MakerDAO Foundation and is issued through smart contracts.
DAI is a more secure token due to the fact that it is backed by a smart contract. So it can't just be confiscated or censored at the expense of the government.
Another important advantage of DAI is that it does not require registration on exchanges. No registration or KYS processes are required to make transactions.
Value support: ETH cryptocurrency
Year created: 2016
Pax Dollar is a stablecoin issued by an American company; previously it had another name: Pax Standart (PAX). The important advantage of Pax Dollar is that it is the first secured asset to be regulated by the DFS.
The company positions the token as one of the best ways to preserve capital because it is backed by the U.S. dollar and Blockchain technology.
Value Support: Dollars in bank accounts.
Year of creation: 2012.
Speaking of stablecoins, we can summarize that each token is good in its own way. All tokens are responsible for stability, saving, and holding funds in fiat currency (most often U.S. dollars). In order for you to choose the right one: you have to decide which blockchain suits you or likes it best. There are also individual features of the choice, such as the company/developers of the stablecoin; the company's projects; growth prospects, etc. You should also make a choice based on how the stablecoin company has established itself in the market.