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5 Top Stablecoins to Know in 2021

Stablecoins are cryptocurrencies that have their prices or market values pegged to some external reserve assets like fiat currencies (e.g. US dollar), metals (gold or silver) or a consensus mechanism. The aim is to avoid volatility by maintaining price stability through the reserve assets.

The volatility in the crypto market has probably got you wondering which other areas to invest in. Many traders and investors like you probably wonder the same. Afterall, actively seeking minimal risks, less losses and stability aren’t too much to ask for.

While there are other alternatives like crypto derivatives trading and liquidity mining to win in a sideways crypto market, stablecoins are also worthy to note. When seeking to avoid the roller coaster ride in the crypto markets, stablecoins are a good way to hedge against volatility. On the other hand, they’re just simply useful when trading multiple pairs as the base currency. Using them as a means of payment is a highly popular use case too.

Here are some of the top stablecoins in the market today:

Tether (USDT)

By market value, Tether is the third biggest cryptocurrency globally. Tether is a stablecoin that’s pegged to the US dollar where each USDT is equivalent to $1. It was created to help investors avoid the extreme volatility of cryptocurrencies by offering stability and lower transaction costs.

As of the time of writing, Tether currently has over 60 billion USDT circulating in supply with a market cap of $61,822,538,714.

USD Coin (USDC)

This is another popular stablecoin backed by the US dollar. 1 USDC is equivalent to $1. The reserves are held in a bank account owned by Centre, the founders of the stablecoin and undergoes financial audits.

USDC is an open-source that allows fiat to interact with smart contracts, giving developers a viable way to use real world currencies in blockchain applications. It was initially only on Ethereum, but is now liquid on Algorand and Solana. Wrapped versions also exist on other platforms like Binance Smart Chains, which is the same for other stablecoins.

Transparency in its transaction process is partly what makes this stablecoin unique from Tether. As of the time of writing, there’s 27 billion USDC in circulation with a market cap of over US$25 billion.

Binance USD (BUSD)

1 BUSD is equivalent to US$1 and can be redeemed as such. The stablecoin was created by a partnership between Paxos Trust Company and Binance. Paxos Trust Company is the custodian of the USD reserves and the issuer of BUSD. It is regulated by the New York State Department of Financial Services. Binance USD supports Ethereum ERC-20, Binance BEP-2 and Binance Smart Chain BEP20 versions.

You can use BUSD as a means of payment across various blockchain platforms. The interesting catch about BUSD is you are not charged any fee for its purchase or redemption.

As of the time of writing, there’s over 11 billion BUSD in circulation with a market cap of over US$11 billion as well.

MakerDAO DAI

This is a fully decentralized stablecoin issued by MakerDAO. It is also backed by the US dollar i.e. 1 DAI equals US$1. The unique point with this decentralized stablecoin is that you can mint it on your own. DAI creates a permissionless system that allows users to lend and borrow crypto assets without needing intermediaries. It’s highly popular in DeFi and a strong alternative to custodial stablecoins

Another cool thing about DAI, unlike other stablecoins, is that DAI is governed by smart contracts which means DAI coins and addresses can’t be changed or manipulated by any external party. This is in contrast to centralized stablecoins like USDT and USDC.

There’s about 5.4 billion DAI in circulation as of the time of writing, making it the fourth largest stablecoin in the market.

TrueUSD (TUSD)

TrueUSD is also a US dollar backed ERC-20 stablecoin. It is fully collateralized, legally protected and transparently verified by third-party attestations. To provide you with adequate legal protections against misappropriation and reduce counterparty risks, TrueUSD uses multiple escrow accounts.

There’s about 1.2 billion TUSD in circulation as of the time of writing.

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