- Stablecoins were launched in a bid to quell the crypto industry’s infamous volatility.
- Tether (USDT), the first stablecoin, remains the biggest and most popular in the category. It also has the highest daily trade volume of all digital assets.
- Today, USD Coin has the fastest-growing reserve, backed 1:1 by the US dollar.
- USD-backed Paxos Standard is regulated by the New York State Department of Financial Services (NYDFS).
Cryptocurrencies are almost synonymous with volatility. Stablecoins are a unique type of crypto that seek to steer clear of the volatility for which the industry is widely criticized. They exist solely to offer a non-volatile crypto alternative, hence the name stablecoin.
They achieve the desired level of stability by being backed at a ratio of 1:1 by the fiat currency or commodity they represent. That means that for every unit of a dollar stablecoin, there is a US dollar somewhere. Now we’re all clear on what stablecoins are, let’s look at the most popular stablecoins on the market today.
Launched in 2014, the USD-backed Tether was the first-ever stablecoin and remains the biggest in the category. Benefiting from its first-mover advantage, Tether has managed to maintain its status as the most popular stablecoin currently on the market.
Tether’s popularity is seen in its daily trade volume, where it leads the industry. Over the last 24 hours, for example, over $170 billion worth of USDT has been traded. By market cap, Tether is at least 3.5 times larger than any other stablecoin. A market cap of $45.9 billion makes it the 5th-largest cryptocurrency.
USD Coin (USDC)
Of the more recent stablecoins, USD Coin (USDC) has the fastest-growing reserve, backed 1:1 by the US dollar. Not only that, the reserves are held in regulated financial institutions in the United States.
USDC launched in September 2018. It is a BEP-20 token and a very popular price-stable asset in BSC’s DeFi lending market. These are some of the contributing factors to the popularity of USD Coin.
USD Coin currently has the second-largest market cap among stablecoins. A market cap of $11.1 billion makes it the 16th-largest cryptocurrency.
On the Flipside
- FEI Protocol is one of the most prominent stablecoins, but the $1-billion project got off to a very rocky start this month and has attracted a lot of negative publicity.
- FEI, which is backed by major venture capitalists, aims to outright buy assets rather than holding them as collateral for loans.
- One week after its launch, FEI was yet to find its footing, trading at $ 0.785284, despite being a 1:1 dollar-backed stablecoin.
Binance USD (BUSD)
Binance, the largest crypto exchange, launched the BUSD to provide a Binance-native alternative to other leading stablecoins. Binance offers two fiat-backed stablecoins – BUSD, which is pegged with the US dollar, and BGBP, which tracks the British pound.
Of the two, BUSD is more popular and can be used in a wide range of DeFi protocols. It is a go-to base currency on decentralized trading pools on Binance Smart Chain. It should not be confused with Binance Coin (BNB), the native token that powers the Binance DEX (decentralized exchange).
Paxos Standard (PAX)
Paxos Standard ranks as one of the most popular stablecoins because it is fully regulated by the New York State Department of Financial Services (NYDFS). The coin was launched in 2018 when Tether came under intense scrutiny amid the early market bull-run.
PAX is an ERC-20 stablecoin that maintains 1:1 parity with the US dollar. To be more transparent, PAX tokens are issued using an audited smart contract. The contracts are inspected by Nomic Labs, while Withum regularly verifies the reserves.