5 best Stablecoins in Crypto Economy
The Crypto economy is booming, and Stablecoins play a crucial role in this. The backing of a physical asset in Stablecoins makes it an alluring cryptocurrency for Liquidity Providers (LPs). This balance of real-world assets and crypto-assets enables the Stablecoins pairing to maintain the market volatility. In a way, LPs avoid the effect of market fluctuation on their earning of rewards.
In comparison to unpegged cryptocurrencies like Bitcoin, Stablecoins limit price fluctuations in Defy ecosystem. Pegging to a “stable” reserve asset, such as the U.S. dollar or metals like gold, platinum, etc. makes Stablecoins cryptocurrency highly stable.
Still, when it comes to investing it is advisable to opt for the topmost Stablecoins for better results. Scroll down to learn more about the 5 best Stablecoins available in the market.
1. Tether (USDT)
Tether (USDT) is undoubtedly the most transacted Stablecoin in the world. That is why it gives a stiff challenge to the top two cryptocurrencies – Bitcoin (BTC) and Ethereum’s Ether (ETH). Contrary to what many believe, Tether Stablecoin is the first stable coin in the crypto economy founded in 2014. The founders – Brock Pierce, Craig Sellars, and Reeve Collin originally rolled it out as “Realcoin”.
The ratio is fixed here at 1:1 to the USD. In simple words, you can buy and redeem one Tether (USDT) for $1. The most intriguing thing about Tether is that this digital token is 100% backed by reserves of traditional currency.
2. USD Coin (USDC)
After USDT, comes USDC or USD Coin. This Stablecoin is also tied to the US Dollar. But it is built on the Ethereum blockchain. Since its release in 2018, USDC has gained only popularity. Today, it is considered the world’s biggest broker and holder of the cryptocurrency Bitcoin. Compatible with Defi applications, USDC runs on many blockchain networks.
Still, it is essential to learn about this Stablecoin that only US citizens with bank accounts in their native country are allowed to return funds. However, when it comes to registration, anyone can do it.
3. TrueUSD (TUSD)
The unique feature of TrueUSD Stablecoin is that it fully relies on U.S. dollars (USD). That is why TUSD is considered one of the most liquid Stablecoins in the crypto ecosystem. Its reserves are audited by Cohen & Co. It is a cryptocurrency audit and tax firm and helps in securing the trust of users in TUSD. Developed on the TrustToken platform, TrueUSD features 1:1 parity against USD.
Note – TrustToken charges no trading fees on TUSD coins, but users have to follow the standards of the platform. Also, this isn’t a fully decentralized platform.
4. Binance USD (BUSD)
In 2019, Binance USD was unveiled in collaboration with Binance and Paxos. Commonly known as BUSD, it is approved by the NY State Department of Financial Services. Since its release, it has become quite popular Stablecoins in the Defi ecosystem.
Pegged to fiat cash, it is one of the fiat-backed Stablecoins. Here the fiat cash is usually the US dollar. Another impressive feature of BUSD is that it keeps users free from the tedious work to wire fiat currency from the online wallet. You can do movements through crypto transactions.
If you are looking for a unique Stablecoin, then Dai is the best option for you. In 2017, Dai was born and backed by the Ethereum-based protocol MakerDAO. It follows the MakerDAO decentralized organizations’ protocol. Initially, DAI is deposited into the MakerDAO vault. Then, it starts functioning as collateral. It is pegged to the US in a 1:1 ratio.
Dai can also be pegged to many other cryptocurrencies, including USD Coin (USDC). and others that can be used as collateral. In comparison to Tether (USDT), the market of DAI is quite volatile, and still effective.
Note – the value of the DAI stable coin is more than the US dollar.
Like any other cryptocurrencies, Stablecoins are permeable to physical boundaries. But what makes Stablecoins so special is its low volatility. Its high stability and less dependency on State institutions make it a powerful cryptocurrency in the Defi ecosystem. However, one cannot deny the fact that Stablecoins’ limitations are also not less. It is monitored and audited by third parties in comparison to unpegged cryptos like Blockchain, and Ethereum, they do not offer high rewards to Liquidity Providers (LPs).
Still, if you are planning to invest in any of the above-mentioned Stablecoins , you will unlock the gates of a less volatile market. You can also avoid the chances of facing Impermanent loss, which is a major challenge faced by many LPs in Liquidity Pools.