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The Top 7 Stablecoins to Invest In
Stablecoins are a good option for cryptocurrency investors looking for a hedge against volatility.
Stablecoins are a less volatile cryptocurrency than traditional cryptocurrencies.
Although cryptocurrencies are valuable, many investors are concerned about their price fluctuations. Bitcoin's value has increased by over 1,000 percent in the last three years. Over that time, the coin's value has also dropped dramatically. These price swings are simply too much for some investors to bear. Stablecoins are cryptocurrencies whose values are linked to another asset such as the US dollar, a commodity, or even other cryptocurrencies. As a result, the currency's price remains more stable. J.R. Willett first proposed the concept of stablecoins in a white paper that was published online in 2012. They've skyrocketed since their inception. The total market capitalisation of the world's stablecoins exceeds $150 billion. Here's a list of the top tokens in this category, ranked by "best stablecoins."
Tether (USDT)
Tether, the world's first stablecoin, was founded in 2014 as Realcoin. It's also by far the largest, with a market cap of $78 billion. Tether, a fiat-based stablecoin, was first described in a white paper published in 2012. In other words, the value of each coin is roughly equivalent to the value of one US dollar held by the parent company Tether Operations Ltd. This means that the coins can always be exchanged for an equal amount of money in the United States. Despite paying a 2021 settlement to the New York attorney general's office over allegations of a lack of financial transparency, an auditing firm Moore Cayman reported in June 2021 that Tether's "reserves held for its digital assets issued exceed the amount required to redeem the digital asset tokens issued." InvestorsObserver, a market analysis firm, rates the coin as low risk, implying that price manipulation is unlikely.
Dai (DAI)
According to the white paper on MakerDAO's Dai stablecoin, "Dai is generated, backed, and kept stable" through the use of Ethereum-based currency deposited into MakerDAO's vaults. This deposited cryptocurrency serves as collateral for withdrawals of Dai currency by the user. Because the deposited cryptocurrencies are worth more than the US dollar, MakerDAO is able to keep its stablecoin pegged to the US dollar at a 1-to-1 ratio. This theory piqued the interest of some investors, as venture capital firm Andreesen Horowitz invested $15 million in MakerDAO in September 2018, less than a year after the currency debuted. This amounted to 6% of the company's total token supply at the time. This institutional investment also contributes to the stability of the coin's value. Despite the fact that InvestorsObserver believes Dai is slightly more volatile than Tether, the currency is rated as low risk.
Binance USD (BUSD)
BUSD, the third-largest stablecoin in the world, is the next contender for best stablecoin, with a market cap of more than $14 billion. The New York State Department of Financial Services "greenlisted" Bitcoin USD in August 2020. This means four things for cryptocurrency investors. First, Paxos Trust Co., Binance's BUSD partner, has enough reserves to cover every BUSD coin in circulation. Second, regulators keep a close eye on the reserves that underpin these coins. Third, all reserves must be held in credible forms, such as US Treasury securities and FDIC-insured bank accounts. Finally, token reserves are completely independent of corporate assets. This means that they are distinct from any holdings declared by Paxos in bankruptcy filings, making the coins even more secure for investors. As a result, it's no surprise that InvestorsObserver rates the BUSD as low risk.
TrueUSD (TUSD)
TrueUSD was the first regulated stablecoin to be backed by the United States dollar. Of course, "regulated" is the key word in that statement. TUSD regulations were put in place because TrustToken Inc., the exchange that issues TrueUSD, wanted to protect the cryptocurrency industry's trust by rooting out fraudulent and manipulative schemes. As a result, TrueUSD is a relatively transparent coin with a market capitalisation of approximately $1.3 billion. Cohen & Company, a cryptocurrency audit and tax firm, has audited TUSD's reserves completely. Many investors are drawn to TrustToken because it does not charge any trading fees on its TUSD coins. However, TrustToken is not completely decentralised, and users must adhere to the TrustToken platform's standards. Regulatory actions on the TrustToken platform, in other words, will affect TUSD holders.
USD Coin (USDC)
USDC – like many of the coins on this stablecoins list – was created in collaboration with cryptocurrency exchange Coinbase Global Inc. (COIN) and Bitcoin mining company Bitmain Technologies Inc. USDC, which was launched in September 2018, has a current market cap of more than $42 billion, making it the second-largest stablecoin in terms of market capitalisation. Grant Thornton LLP, a Chicago-based accounting firm, certifies the USDC reserves on a monthly basis. The reserves, while attested to, are not audited. This means that the company will verify the accuracy of existing data but will not conduct an internal audit. InvestorsObserver considers USDC to be a low-risk cryptocurrency, despite its volatility ranking being slightly higher than that of industry leader Tether.
TerraUSD (UST)
The goal of TerraUSD, according to its white paper, is to be "both price-stable and growth-driven." TerraUSD's protocol is supported by Terra, Terra's own native cryptocurrency. It's pretty simple how this works. The Terra platform protocols incentivise users to earn extremely low-risk profits when TerraUSD's price is less than $1; by linking TerraUSD to the regular Terra (LUNA) coin and allowing LUNA to be exchanged for either UST or dollars (and vice versa), more UST is created when its price rises above a dollar, while the UST pool begins to contract when its price falls below a dollar, bringing the UST pool back into balance. This give and take keeps the TerraUSD price stable in relation to the USD. It appears to be effective. InvestorsObserver considers TerraUSD to be a low-risk coin, despite being rated slightly riskier than Tether and Binance USD.
Digix Gold Token (DGX)
DGX operates differently than the other stablecoins on this list. As a result, InvestorsObserver assigns a higher risk rating to this coin than to the others mentioned previously. According to the site, DGX is a medium-risk coin, which means that while the price may be more volatile, it is unlikely to be manipulated. Because DGX is not pegged to a fiat currency, its volatility has increased. Rather, each DGX coin is worth one gramme of gold. This means that the value of the coin is determined by the value of gold. The price of DGX changes in tandem with the price of gold. Although this increases the currency's volatility, many investors who believe in the power of hard assets find it appealing. There are approximately 58,000 DGX coins in circulation, with a market capitalisation of approximately $4.1 million.
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By Crypto PiratesStablecoins are a good option for cryptocurrency investors looking for a hedge against volatility.
Stablecoins are a less volatile cryptocurrency than traditional cryptocurrencies.
Although cryptocurrencies are valuable, many investors are concerned about their price fluctuations. Bitcoin's value has increased by over 1,000 percent in the last three years. Over that time, the coin's value has also dropped dramatically. These price swings are simply too much for some investors to bear. Stablecoins are cryptocurrencies whose values are linked to another asset such as the US dollar, a commodity, or even other cryptocurrencies. As a result, the currency's price remains more stable. J.R. Willett first proposed the concept of stablecoins in a white paper that was published online in 2012. They've skyrocketed since their inception. The total market capitalisation of the world's stablecoins exceeds $150 billion. Here's a list of the top tokens in this category, ranked by "best stablecoins."
Tether (USDT)
Tether, the world's first stablecoin, was founded in 2014 as Realcoin. It's also by far the largest, with a market cap of $78 billion. Tether, a fiat-based stablecoin, was first described in a white paper published in 2012. In other words, the value of each coin is roughly equivalent to the value of one US dollar held by the parent company Tether Operations Ltd. This means that the coins can always be exchanged for an equal amount of money in the United States. Despite paying a 2021 settlement to the New York attorney general's office over allegations of a lack of financial transparency, an auditing firm Moore Cayman reported in June 2021 that Tether's "reserves held for its digital assets issued exceed the amount required to redeem the digital asset tokens issued." InvestorsObserver, a market analysis firm, rates the coin as low risk, implying that price manipulation is unlikely.
Dai (DAI)
According to the white paper on MakerDAO's Dai stablecoin, "Dai is generated, backed, and kept stable" through the use of Ethereum-based currency deposited into MakerDAO's vaults. This deposited cryptocurrency serves as collateral for withdrawals of Dai currency by the user. Because the deposited cryptocurrencies are worth more than the US dollar, MakerDAO is able to keep its stablecoin pegged to the US dollar at a 1-to-1 ratio. This theory piqued the interest of some investors, as venture capital firm Andreesen Horowitz invested $15 million in MakerDAO in September 2018, less than a year after the currency debuted. This amounted to 6% of the company's total token supply at the time. This institutional investment also contributes to the stability of the coin's value. Despite the fact that InvestorsObserver believes Dai is slightly more volatile than Tether, the currency is rated as low risk.
Binance USD (BUSD)
BUSD, the third-largest stablecoin in the world, is the next contender for best stablecoin, with a market cap of more than $14 billion. The New York State Department of Financial Services "greenlisted" Bitcoin USD in August 2020. This means four things for cryptocurrency investors. First, Paxos Trust Co., Binance's BUSD partner, has enough reserves to cover every BUSD coin in circulation. Second, regulators keep a close eye on the reserves that underpin these coins. Third, all reserves must be held in credible forms, such as US Treasury securities and FDIC-insured bank accounts. Finally, token reserves are completely independent of corporate assets. This means that they are distinct from any holdings declared by Paxos in bankruptcy filings, making the coins even more secure for investors. As a result, it's no surprise that InvestorsObserver rates the BUSD as low risk.
TrueUSD (TUSD)
TrueUSD was the first regulated stablecoin to be backed by the United States dollar. Of course, "regulated" is the key word in that statement. TUSD regulations were put in place because TrustToken Inc., the exchange that issues TrueUSD, wanted to protect the cryptocurrency industry's trust by rooting out fraudulent and manipulative schemes. As a result, TrueUSD is a relatively transparent coin with a market capitalisation of approximately $1.3 billion. Cohen & Company, a cryptocurrency audit and tax firm, has audited TUSD's reserves completely. Many investors are drawn to TrustToken because it does not charge any trading fees on its TUSD coins. However, TrustToken is not completely decentralised, and users must adhere to the TrustToken platform's standards. Regulatory actions on the TrustToken platform, in other words, will affect TUSD holders.
USD Coin (USDC)
USDC – like many of the coins on this stablecoins list – was created in collaboration with cryptocurrency exchange Coinbase Global Inc. (COIN) and Bitcoin mining company Bitmain Technologies Inc. USDC, which was launched in September 2018, has a current market cap of more than $42 billion, making it the second-largest stablecoin in terms of market capitalisation. Grant Thornton LLP, a Chicago-based accounting firm, certifies the USDC reserves on a monthly basis. The reserves, while attested to, are not audited. This means that the company will verify the accuracy of existing data but will not conduct an internal audit. InvestorsObserver considers USDC to be a low-risk cryptocurrency, despite its volatility ranking being slightly higher than that of industry leader Tether.
TerraUSD (UST)
The goal of TerraUSD, according to its white paper, is to be "both price-stable and growth-driven." TerraUSD's protocol is supported by Terra, Terra's own native cryptocurrency. It's pretty simple how this works. The Terra platform protocols incentivise users to earn extremely low-risk profits when TerraUSD's price is less than $1; by linking TerraUSD to the regular Terra (LUNA) coin and allowing LUNA to be exchanged for either UST or dollars (and vice versa), more UST is created when its price rises above a dollar, while the UST pool begins to contract when its price falls below a dollar, bringing the UST pool back into balance. This give and take keeps the TerraUSD price stable in relation to the USD. It appears to be effective. InvestorsObserver considers TerraUSD to be a low-risk coin, despite being rated slightly riskier than Tether and Binance USD.
Digix Gold Token (DGX)
DGX operates differently than the other stablecoins on this list. As a result, InvestorsObserver assigns a higher risk rating to this coin than to the others mentioned previously. According to the site, DGX is a medium-risk coin, which means that while the price may be more volatile, it is unlikely to be manipulated. Because DGX is not pegged to a fiat currency, its volatility has increased. Rather, each DGX coin is worth one gramme of gold. This means that the value of the coin is determined by the value of gold. The price of DGX changes in tandem with the price of gold. Although this increases the currency's volatility, many investors who believe in the power of hard assets find it appealing. There are approximately 58,000 DGX coins in circulation, with a market capitalisation of approximately $4.1 million.
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