The cryptocurrency market has gained much attention in recent times when people from different industry backgrounds adopted Bitcoin as a safe haven asset. However, the high risk of being more volatile is one of the major hindrances of Bitcoin being a mode of exchange or payment methods.
On the other hand, Stablecoins similar to any crypto-asset like bitcoin can be a reliable form of investment as the price does not fluctuate as the other cryptos and hence possesses less or negligible volatility.
But can Stablecoins gain momentum or the market grip as the cryptocurrencies like Bitcoin? Let us find it out.
What are Stablecoins?
Stablecoins are also cryptocurrencies which are pledged to another type of assets like fiat currencies and commodities. The cost of the stablecoin will always be equal to the backed currency or commodity.
Stablecoins offer both high speed and more secured environments. Some of the benefits include,
- More secured with cryptographic encryption and hashing
- Peer-to-peer transfers
- Real-time transactions
There are more than 200 stablecoins present in the crypto space, among them 30 percent are active, 60 percent are under development and 10 percent have been discontinued. The most popular stablecoin is Tether(USDT) which is backed by the USD.
Is Stablecoins Important for Trading?
Stablecoins as mentioned are the digital representation of the fiat currency and hence they become very vital being a reliable store value and medium of exchange. As the value is backed by the fiat currency, the risk of being volatile as the other cryptos are less in stablecoins. Hence keeping the public interest and scope for investment wider.
Stablecoins have a huge market cap of more than $20 billion and 6.22 percent dominance among the other cryptos.
To that effect, the market has seen an influx of stablecoins with quite a number of them trending. Hence, there are ten stablecoins making waves in the market.
Top Trending Stable Coins in 2020
Tether is a blockchain-based platform built to facilitate the use of fiat currencies in a digital manner. It is backed by the USD in the ratio 1:1 with.
The whales are considered to rule this particular stablecoin. Due to the high market capitalization and market dominance, the growth rate is pretty slow compared to any other coin.
Ranked number 3, Tether’s shares a market capitalization of more than $15 billion and the circulating supply of 15,579,920,742 with the total supply of 16,025,651,186.
USD coin is also a digital representation of the US Dollars launched by CENTRE consortium, Coinbase and Circle. Similar to Tether USD coin also equates with the USD with the ratio 1:1.
USDC market capitalization is less compared to that of the USDT, but it plays a vital role in the Ethereum-based DeFi space.
USD coin has $2.54 billion market capitalization with a circulating supply of 2,588,515,942 and a total supply of 2,595,297,562.
DAI is one of the popular decentralized stablecoin developed by MAKER. The Maker community i.e. the MAKER holders govern the DAI stablecoin. DAI also has equal value as the US dollars and has been integrated with more than 400 apps.
The market capitalization of DAI has increased over 239 percent since July 2020 which has spiked drastically in the last week of September 2020. The key reason for the spike is considered as the intensified yield farming in the DeFi space.
DAI shares a market capitalization of $873,058,114 with a circulating supply of 869,095,288 and a total supply of 869,568,555.
Binance USD is one of the popular Stablecoin, developed and released by Binance exchange. Backed by the US Dollar with the ratio 1:1, the market capitalization is $518 million with both circulating supply and a total supply of 545,844,334.
Launched in September 2019 in collaboration with Paxos Binance rolled out BUSD that runs on the Ethereum blockchain. It is approved by the New York State Department of Financial Services(NYDFS) and is structured in such a way that the users who hold BUSD are entitled to lower transaction fees.
TrueUSD is considered as one of the most reliable and proven stablecoins in the crypto space. With more than $1 million in reserves, it is also backed by the U.S.Dollars with the ratio 1:1.
TUSD is not featured as USDT or any other stablecoin on other platforms, but yet the investors prefer TUSD over any other stablecoin because it is more transparent. As Tether is backed by the USD and some unspecified ‘credit instruments’, TUSD is backed by only the USD.
Paxos Standard or PAX is one of the most quickly adopted stablecoin. It has been approved by the New York State Department of Financial Services. It is also backed by the USD with the ratio 1:1. The tokens get destroyed when redeemed to the US dollar.
PAX can be stored in any ERC-20 wallet and been registered under the New York State banking law. Paxos is considered as a ‘Safely Stores’ of the user funds as they ensure that every PAX is backed by one dollar.
HUSD is an ERC-20 stablecoin that is 1:1 ratio pegged with USD. It was issued by stable universal which is an entity that claims to follow US regulations.
HUSD has a total market cap of $125 million with a circulating supply and total supply of 125,048,543.
USDN is considered as the highest yielding stablecoin with an increase in 36 percent in the market capitalization since it’s inception in July 2020 which is currently $21.7 million.
USDN is among the stablecoins that is not built on Ethereum with an annual yield of 23.5 percent which is considered as highest among others.
The coins circulating and total supply stands at 29,383,959 with a 24-hour trading volume of nearly $2 million.
The Gemini Dollar(GUSD) is a project in collaboration between the Gemini Trust, LLC and New York Trust Company. As the other stablecoins, GUSD is also pegged 1:1 to the US Dollars and built on the Ethereum-blockchain.
Some of the advantages GUSD include that it is fully under the surveillance of NYDFS and abides by US laws and regulations. The dollars are stored in a special account of American holding company State Street Corporation. Moreover, the account is insured by the Federal Deposit Insurance Corporation(FDIC).
The total and the circulating supply of GUSD is 14,328,758 with a market capitalization of over $14 million.
Launched in July 2018, STASIS EURO token is a virtual financial asset designed to digitally back the EURO on a 1:1 ratio.
STASIS EURO has the market capitalization of $36,755,709 with both circulating supply and the total supply of 31,979,207.
The Future of Stablecoins
The fintech sector is developing at a very high pace with more advanced technology and digital mode of payments. Stablecoin can make digital payments hazel-free with a quick and secure environment while maintaining the stability of the price.
It also keeps the doors more wide open for the easy adoption of the cryptocurrencies in everyday life.