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Best stablecoins will be the cryptocurrency of choice for people who want to keep their family fortune safe. The best projects have a solid foundation, strong community, and are backed by trusted entities like governments and major institutions.
The “best stablecoin 2021” is a cryptocurrency that was created in 2020. The coin has been rated and analyzed for 2022.
Stablecoins are a kind of digital money that is backed by the value of an underlying item, which may be anything from fiat currency to oil and gold, or even cryptocurrency.
Tether (USDT) and USD Coin (USDC), for example, are stablecoins backed by US dollars in reserve. PAX Platinum (PAXG), on the other hand, is backed by a gold reserve to keep its price stable.
Stablecoins are regarded as one of the main financial innovations of the twenty-first century:
- Stablecoins are ideal for traders or investors who want a digital asset to “keep value” without the volatility of cryptocurrencies.
- Stablecoins provide new opportunities to generate income (also known as “yield”) at a time when conventional savings vehicles provide nothing. (For more information, see our Best Interest Rates page.)
- Stablecoins also provide a low-cost, quick, and easy way to move money across borders.
We’ll go through our top stablecoins in this article, then go over how savvy investors may utilize stablecoins to grow wealth.
The Best Stablecoins
| Name | Description | Year of Inception | Followers on social media | Asset that has been stabilized | Team Characteristics | Mechanism of Stabilization | Score |
|---|---|---|---|---|---|---|---|
| Standard PAX | Paxos Standard Token is a payment platform that includes the PAX stablecoin, which is backed 1:1 by the USD. | 2016 | 26,700 | Dollar of the United States of America | Paxos’ backers are a diverse group with a depth of experience in both technology and finance. | PAX is backed by a USD reserve at a 1:1 ratio. | 5 |
| True USD | True USD is a one-to-one stable currency with a token value of $1 USD. | 2018 | 17,200 | Dollar of the United States of America | Despite having no financial experience, the young team behind this initiative includes some of the most significant technical names in the sector. | Escrow: Each True USD is backed by one dollar in the United States, which is kept in an escrow account by third parties. The True USD method allows qualifying institutions to participate, removing the requirement for faith in a central initiative (albeit replacing that with the need for trust in third-party accounting). The price has stayed constant within $0.02 with just two tiny fluctuations. | 4.5 |
| USD Coin | The CENTRE Consortium has released USDC, a full reserve dollar stablecoin. | 2018 | 5,600 | Dollar of the United States of America | Brightcove and Macromedia are two of the high-profile technology firms that the CENTRE and CIRCLE teams have developed and helped operate. | Each USDC coin is backed by a $1 US investment in an owned account. The CIRCLE project would manage a network of USDC issuers, each of which will have its own cash reserves to stable the tokens it produces, ensuring decentralization. While CIRCLE’s control helps protect against value fluctuations, permitting other parties to issue the USDC autonomously raises the risk of human mistake or malicious actors. | 4.5 |
| Dai | The Dai is a decentralized stable currency with a one-to-one peg to the US Dollar. | 2017 | 190,500 | Dollar of the United States of America | MakerDao’s Founder, who graduated in 2014, has nearly little experience. It has compensated for this shortfall by adding more executive-level personnel with a broad range of relevant expertise. | Collateral Against Ethereum: To produce Dai tokens, users must acquire and stake an identical amount of Ethereum tokens (in US dollars). Users will be encouraged to manufacture additional Dai as the price of the currency grows. Users will be enticed to sell their assets back to the pool when the price declines. | 4.5 |
| GUSD | The Gemini USD stablecoin, created by the Gemini cryptocurrency exchange, promises to be the first Dollar of the United States of America-backed stablecoin to get regulatory certification in the United States and wants to be the most transparent stablecoin on the market. | 2018 | 330,800 | Dollar of the United States of America | Tyler and Cameron Winklevoss, two Bitcoin millionaires with a long history in business, launched Gemini. This trickles down to the team, which has a wealth of experience between them. | GUSD is fully collateralized, with actual funds in reserve and periodic audits. | 4.5 |
| Digix | Digix promises that each DGX token symbolizes 1 gram of genuine, solid gold in a Singapore vault, taking the concept of a blockchain gold standard to its logical conclusion. The benefit of this versus buying gold directly or buying options is debatable, but the method is solid. | 2016 | 17,600 | Gold | Digix is led by a team that has worked at some of the world’s most prestigious companies in finance and blockchain development. | Asset-Backed: Once the underlying Proof of Provenance system validates that a matching ounce of gold is in the vault, a Digix token is produced. Since its debut, the price has changed by around 25%. | 4 |
| USD Binance | BUSD is a fully-regulated stablecoin backed by US dollars, issued by the Paxos Trust Company and developed by Binance, one of the world’s biggest cryptocurrency exchanges. | 2019 | 6,100,000 | Dollar of the United States of America | Binance, in cooperation with Paxos, has a plethora of industry-leading knowledge as the world’s top cryptocurrency exchange. | Each BUSD is backed by a reserve of dollars kept in the Paxos account at a 1:1 ratio. | 4 |
| Huobi USD | Huobi, one of Asia’s major cryptocurrency exchanges, released the HUSD stablecoin token in collaboration with Stable Universal as a way to decouple from pre-existing 3rd party stablecoins and get visibility in DeFi marketplaces and platforms. | 2020 | 736,600 | Dollar of the United States | Huobi, a Singapore-based exchange, has had a market-leading position for a number of years. | Every HUSD token is collateralized by US dollars kept in reserve by a registered trust organization. | 4 |
| Tether | Tether is one of the most well-known, highly respected, and trustworthy stablecoins available. | 2015 | 170,300 | Dollar of the United States of America | Bloomberg, among other news sites, has raised severe concerns about Tether’s accounting procedures. The company’s founders have a diverse spectrum of professional backgrounds, including finance and retail. | Tether tokens are collateralized by a $1 U.S. investment in an owned account for each token. Despite the fact that major issues about the company’s accounting processes have been raised in this respect, the token’s price has remained steady at about $0.05. | 4 |
| PAX Gold (PAXG) | PAXG is a gold-backed Ethereum-based digital asset. Each token is backed by one fine troy ounce (t oz) of gold, according to the website. If you own PAXG, you also own the gold that underpins it. | 2019 | 26,700 | Gold | Paxos’ backers are a diverse group with a depth of experience in both technology and finance. | Paxos’ backers are a diverse group with a depth of experience in both technology and finance. | 4 |
| USD is a stable currency. | Stably is a cryptocurrency that is tied to the US dollar, with each token having a value of one dollar. | 2019 | 2,900 | U.S. Dollar | Stably has a staff with both technological and financial skills. While they have no prior experience with blockchain, their executive team has worked with some of the industry’s most prestigious companies. | Stably will maintain $1 in reserves for each token delivered, as well as quarterly audits. | 3.5 |
| Terra USD | Terra is a blockchain platform that has developed a number of fiat-backed stablecoins that are used to power worldwide payment networks. The company designed the UST decentralized stablecoin to make it accessible to all developers and blockchains, with DeFi yield earning as a key feature. The firm’s objectives include developing interchain stablecoins and addressing scalability challenges. | 2020 | 214,000 | Cryptocurrency | In the Asia-Pacific area, Terra has a considerable presence. The team has extensive e-commerce, software engineering, and business development expertise. | Terra UST is an algorithmic stablecoin that is collateralized. A dollar of the reserve asset $LUNA is burnt with every UST created. | 3 |
Top Stablecoins in Order of Size
Here’s a look at how the stablecoins compare to one another in terms of market capitalization (the total amount owned by investors):
Stablecoins come in a variety of shapes and sizes.
Stablecoins supported by another asset or authority are similar to fiat money in that they are backed by the government. The many sorts of stablecoins and how they’re backed are listed below.
Stablecoins Backed by Fiat
Fiat-backed stablecoins are linked to a specific fiat currency, such as US dollars or Euros. Fiat-backed stablecoins have a higher level of stability than crypto-backed stablecoins. While cryptocurrencies have dramatic price swings, fiat-backed stablecoins have limited price swings since they are backed by a trusted currency.
Fiat-backed stablecoins, on the other hand, are new and have a limited track record, so they’re not without danger.
USD Coin is a fiat-backed stablecoin offered by Coinbase, one of the world’s major cryptocurrency trading platforms. This coin may be exchanged for a dollar at a 1:1 ratio. Because each USDC is backed by one US dollar, it is typically safe to use.
Stablecoins with a Cryptocurrency Backing
These are stablecoins that are “backed” by other crypto assets, as the name implies. Crypto-backed stablecoins are overcollateralized due to the volatility of cryptocurrency values (meaning they keep extra crypto in reserves, in case of a market crash).
To borrow $5 of a crypto-backed stablecoin, for example, you could have to “put in” (or lock up) $10 of another crypto asset as collateral. You still have a $5 built-in buffer if the underlying crypto asset loses value. Crypto-backed stablecoins are less trustworthy than fiat-backed stablecoins as a result of this volatility.
Stablecoin with a Commodity Backing
The value of these stablecoins is maintained by precious metals or other commodities like as real estate or oil. While the majority of these stablecoins are centralized, the centralization shields consumers against crypto volatility. Gold is the most often collateralized commodity. Three of the most liquid gold-backed stablecoins include Paxos Gold, Tether Gold, and Digix.
Stablecoins backed by commodities let you to invest in assets that might otherwise be out of reach. Obtaining and keeping a gold bar, for example, may be time-consuming and costly, thus owning a “gold stablecoin” is a more convenient method to retain value without having to purchase the underlying commodity.
Algorithmic Stablecoin is a cryptocurrency that is based on algorithms.
To regulate the quantity of tokens in circulation, algorithmic-backed stablecoins use specialized algorithms and smart contracts. If an algorithmic stablecoin’s price is fixed at $1, but the price of the stablecoin increases, the computer algorithm will automatically release additional tokens into the supply to bring the price down.
When the market price falls below the price of the fiat currency it follows, an algorithmic stablecoin will lower the quantity of tokens in circulation.
What Is the Purpose of Stablecoins?
Here are a few of the most common scenarios:
- Stablecoins are a safe haven asset. Unlike cryptocurrencies, which vary substantially in price, stablecoins have a low chance of losing value.
- Payments: Businesses may save money by accepting stablecoins as payment since they avoid transaction costs charged by traditional payment processors.
- Instant Settlements: Because settlements are subject to normal banking hours, they are frequently unable to be provided promptly. Stablecoins work on the blockchain, which means they’re available 24 hours a day, seven days a week, and parties can be paid right away.
- Lending: Stablecoin lending may give double-digit interest, making it a high-yield option for crypto investors.
- Stablecoins automate the escrow process by using smart contracts to analyze escrow circumstances without the involvement of an intermediary.
- Alternative Banking: 14.1 million individuals in the United States do not have a bank account. To have a stablecoin “account,” all you need is internet connectivity, which gives everyone financial access.
What Is the Best Way to Make Money with Stablecoins?
The majority of individuals earn money with traditional cryptocurrencies through trading, mining, staking, lending, or yield farming. Making money with stablecoin is a bit different since it is linked to an asset. Here are several methods to profit from stablecoins:
- Staking: Staking entails assisting in the maintenance of the blockchain network’s flow on a certain asset. In exchange, you will get remuneration from the network’s earnings. In essence, you’re securing your stablecoins in order to collect incentives. Binance, Tether, and PAX Gold are examples of stablecoins that give staking benefits. (For more information, see our guide to the Best Crypto Staking Yields.)
- Lending: You may make money by lending your stablecoins to borrowers, with rates of return ranging from 5% to 12%. Many prominent crypto lending sites, like as BlockFi or Celsius, allow you to lend your stablecoin. (For more information, see our list of the Best Crypto Lending Platforms.)
- Yield Farming: Like earning interest on a typical savings account, yield farming lets investors to make money by lending stablecoins using smart contracts. (For more information, see our Best Yield Farming Rates page.)
The Argument in Favor of Stablecoins
A currency must be able to consistently hold value in order to function. Savers must have faith that the money they deposit in the bank on Monday will accurately represent their wealth on Friday. Both inflation and deflation must be kept under check.
As a result, a number of digital money initiatives have chosen a different approach. Rather of replacing conventional money, they will complement it. “Consistent cryptocurrencies” are those that are pegged to a fiat currency of choice, usually the dollar, and alter the quantity of tokens in circulation automatically to maintain the price stable.
Several governments have chosen this strategy, even before cryptocurrencies became widely used. Cambodia’s riel, for example, is valued at 4,400 riel to one US dollar. Their objective is to establish an electronic wallet that functions as a bank account rather than a portfolio of investments.
Stablecoins simply put this currency’s “peg” into code.
What Is the Price Stability of Stablecoins?
When checking at stablecoin values on digital asset data portals, you’ll discover that they don’t always stay “stable” at $1.00. Tether (USDT), USD Coin (USDC), and the Gemini Dollar (GUSD) were trading at $1.01, $1.01, and $1.02, respectively, at the time of writing this article.
The reason for this is that issuers of dollar-collateralized stablecoins must regulate their coin supply by issuing and burning/redeeming to keep the value of their coins close to one-to-one with the US dollar.
There have, however, been stablecoins that have completely lost their peg. Steem Dollars (SBD), for example, are a cryptocurrency on the Steemit network that was created to keep its value constant at one dollar. The company behind the Steemit network, on the other hand, soon abandoned controlling the coin’s money supply and allowed the digital currency to float freely. During the 2017 boom, this led the coin’s value to skyrocket above $15 before plummeting to as low as $0.51.
Not all stablecoins are price-stable to the same degree. Furthermore, certain stablecoins are riskier than they seem owing to their centralized structure and occasional lack of transparency, even though their prices fluctuate roughly around the $1 level. Do your homework and never invest more money than you can afford to lose.
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The “what is the best stablecoin reddit” is a question that has been asked many times. This article will analyze and rate the top 10 stablecoins for 2022.
Frequently Asked Questions
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