A stablecoins is a type of cryptocurrency that has its value backed by the value of other assets, such as gold or fiat currency.
This new genre of cryptos has seen more and more coins appearing on the market, all of which are trying to dethrone the most known stablecoin of them all, Tether. Below, we shall be looking into different stablecoins and their features.
Tether is the first established stablecoin of the crypto market, developed in early 2015. It is a fiat-collateralized cryptocurrency, which means that it is backed by fiat currency at a 1:1 ratio. But Tether has been surrounded by many controversies over the past year where it has been revealed that Bitfinex, a popular Bitcoin exchange, was using the token to manipulate the market in its favor.
There is also a problem regarding the fact that the company has been issuing millions of USDT without being properly audited which seems in conflict with what they initially promised. Nevertheless, it the most widely used and supported stablecoin as of now in the crypto market with a market cap of $1,911,111,175, placing it on 8th position on CoinMarketCap.
TrueUSD is an ERC20- based stablecoin that is pegged to the US dollar. It might seem similar to USDT at first glance but unlike it, TrueUSD is completely fiat-collateralized, legally protected, and transparently verified by third-party verifications.
The token is managed by individuals that are former employees of Google, PwC, and UC Berkeley. The company intends on tokenizing other real-world assets such as TrueEuro, TrueBond, TrueYen, thus bringing more stability into the fluctuating world of cryptocurrencies.
TureUSD’s market cap currently is much lower when compared to USDT ($208,905,128) and it ranks in 27th at the moment, but its acceptance is increasing at a rapid pace.
MakerDAO is a decentralized autonomous organization that intended to create a new breed of stablecoins. Starting in early 2017, MakerDAO proposed to Tether its stablecoin, known as DAI to the value of the US dollar. However, it is not backed by the fiat currency itself, instead, it is backed by Ethereum.
This type of stablecoins are known as crypto-collateralized stablecoins, meaning that they are backed by other cryptocurrencies.
MakerDAO and DAI have received criticism for being extremely difficult to understand by other market investors and their model hasn’t been properly trialled either. These are a few reason as to why DAI adoption is not currently seeing any progress.
USD Coin (USDC)
The Centre USD Coin (backed by Circle and Coinbase) is a stablecoin that succeeded in quickly establishing itself on the market due to the large size and importance of its corporate backers. It already has important partnerships with prominent crypto institutions and exchanges, including OKEx, Ledger, Kyber, Trust Wallet and DigiFinex.
USDC is also based on the ERC20 protocol, meaning it runs using the Ethereum Network, and also benefitting from its tremendous popularity and strong user base. Within 2 months of its launch, USDC entered in the top 30 of all coins by market cap, making it one of the fastest growing coins ever to be released, as well as the fastest rising stablecoin.
USD Coin’s reserves are held by regulated and licensed financial institutions that are obligated to present regular reports of their USD reserve holdings, and to also make such information available when requested.
Gemini Dollar (GUSD)
Having been in development for quite a while, the Gemini Dollar was created by the Winklevoss twins, famous Bitcoin investors and owners of the Gemini exchange. They are also known as being massive supporters of Bitcoin ETF adoption to Wall Street, but so far their attempts have been unsuccessful due to SEC regulation.
Launched just under three months ago, it has already been listed on 19 different exchanges and is situated on 50th position according to market cap. The token has an immense potential not only for having famous founders, but also because GUSD is legally compliant with several different standards.
HUSD differs from the other stablecoins presented on our list, as it can only be used within the limits of the Huobi exchange, serving as an exchange base pairing representative of the 4 stablecoins which Huobi currently supports (TUSD, USDC, GUSD, PAX).
When any of these 4 stablecoins are deposited into a Huobi trading account, they will be automatically converted to HUSD, and traded against any HUSD coin pairings. When cashing out, a trader must choose the stablecoin they want to cash out into, and the conversion is executed without requiring any fees.
Its use is currently limited to the Huobi exchange, but the company intends on making it available for uses outside the platform in the near future.
NuBits is the first stablecoin in wide circulation, that suffered from not having properly managed collateral backing to ensure its stability. NuBits uses the Proof of Work protocol, meaning it has a proprietary blockchain, and is (was) backed by asset managers that purchased and sold capital based on its issuance.
But on June 2016, the token saw a sharp drop of 80% in the span of 3 weeks. NuBits asset managers were unprepared for this, and they were unable to liquidize investments fast enough to maintain the price of their coin equal to the dollar. Eventually, after a 3 months, they succeeded to re-stabilize their coin.
However, this was not the end of USNBT’s problems, as the price of BTC crashed in early 2018. As a result, the price plummeted again, this time failing to get out of the downward trend.
Currently trading well below the $1 mark ($0.050237), it seems improbable they will ever gain back their $1 pegging, even though they still function as a tradeable coin.
With this, we conclude our list of the top stablecoins within the crypto market, many of which have the potential of being serious rivals for Tether. While no one can predict with certainty the emergence of another multi-billion dollar stablecoin again, many of the newer stablecoins have seen Tether’s past errors and will surely implement different approaches.