Top 7 Stablecoins

published on: February 25th, 2022

Top 7 Stablecoins

Stablecoins are cryptocurrencies that have their values pegged to another asset such as the U.S. dollar, a commodity or even other cryptocurrencies. This keeps the price of the currency more stable. The use case for stablecoins is when you exit out of volatile cryptocurrencies such as Bitcoin, Ethereum, Litecoin or any other non-stablecoin you are actively trading and then want to move trading funds into a more stable environment, protecting a portfolio against possible larger market drops.

The TOP 7 Stablecoins we recommend would be the following:

1. Tether (USDT)

Tether is currently the top stablecoin used worldwide. Tether is a fiat-based stablecoin. In other words, each coin is about equal to the value of one US dollar held by the parent company Tether. This means the coins can always be exchanged for an equal value in U.S. dollars.

More info here:

2. USD Coin (USDC)

Founded in conjunction with cryptocurrency exchange Coinbase Global Inc. (ticker: COIN) and Bitcoin mining company Bitmain Technologies Inc., USDC, is tied to the U.S. dollar. It was released in September 2018 and current as of February 2022 is the second-largest stablecoin by market cap. USDC reserves are attested to on a monthly basis by Grant Thornton LLP, a Chicago-based accounting firm. Although the reserves are attested to, they aren’t audited. This means the firm will check the validity of existing data, but it won’t audit for internal inconsistencies. Although the coin’s volatility ranking is slightly higher than industry leader Tether’s, USDC is still considered a low-risk cryptocurrency.

More info here:

3. DAI (DAI)

Dai is generated, backed & kept stable by the use of Ethereum-based currency deposited into MakerDAO’s vaults. This deposited cryptocurrency then works as collateral for whenever a user wants to withdraw DAI currency. Because the deposited cryptocurrencies are worth more than the U.S. dollar, MakerDAO can keep its stablecoin pegged loosely to the U.S. dollar at a 1-to-1 ratio.

More info here:

4. TrueUSD (TUSD)

TrueUSD was the first regulated stablecoin backed by the U.S. dollar. TrueUSD is a relatively transparent coin with a market cap of about +$1.3 billion. TUSD’s reserves are fully audited by Cohen & Company, a cryptocurrency audit and tax firm. TrustToken doesn’t charge any trading fees on its TUSD coins, which is enticing to many investors. Keep in mind TrustToken is not fully decentralized and users are bound to the standards of the TrustToken platform.

More info here:

5. TerraUSD (UST)

The goal of UST is to remain price-stable and growth-driven. TerraUSD’s protocol is stabilized by Terra’s own native cryptocurrency, Terra. The Terra platform protocols incentivizes users to earn extremely low-risk profits when TerraUSD’s price is anything other than $1; by linking TerraUSD to the regular Terra (LUNA) coin, and allowing LUNA to be exchanged for either UST or dollars (and vice versa), more UST is created when its price rises above a dollar, while the UST pool starts to contract when its price is below a dollar, bringing equilibrium. This give and take keeps the price of TerraUSD stable with respect to the dollar. The market considers TerraUSD to be a low-risk coin.

More info here:

6. Binance USD (BUSD)

BUSD is the third-largest stablecoin in the world. In August 2020, BUSD was “greenlisted” by the New York State Department of Financial Services. For investors in the coin, this means four things.

a. Paxos Trust Co. – Binance’s partner behind BUSD – has sufficient reserves to cover every BUSD coin in existence.

b. Regulators watch over the reserves backing these coins.

c. All reserves are held in credible forms such as U.S. Treasury instruments and Federal Deposit Insurance insured bank accounts.

d. Token reserves are fully separate from corporate assets. This means they’re separate from any holdings Paxos might declare in bankruptcy filings, which makes the coins more secure for investors.

More info here:

7. Digix Gold Token (DGX)

More of a higher risk by market sentiment, meaning the price may be more volatile, but it’s still not likely to be manipulated. The reason for DGX’s increased volatility is that it isn’t pegged to a fiat currency. Instead, each DGX coin is redeemable for one gram of gold. This means the coin’s price depends on the price of gold. As gold’s price fluctuates, so does the price of DGX. Although this makes the currency more volatile, it’s attractive to many investors who believe in the power of hard assets. There are 58,000 DGX coins in existence.

More info here:

Marius Landman

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