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Stablecoins -
For more than three years, the crypto market has suffered the results of scandals, crashes,
rumors and prohibitions. All of those events continue to add daily volatility to the market,
scaring many investors of entering the game.
However, 2019 set a new tone, as stablecoins has emerged as the perfect solution to the
problem of transparency, security and privacy. Those assets enjoy many of the advantages
of being a cryptocurrency, but does not get affected by volatile movements.
Stable cryptocurrencies are coins with almost non-fluctuating values. Those coins are
usually synonyms of stability inside the crypto space and represent a solution against price
fluctuation. Those coins are usually pegged to other recognized and stable assets such as
the Dollar or even Gold.
Those assets have the same features of the rest of the digital coins, simplistic and scalable.
The creation of stablecoins are a tremendous boost for the industry, as they will accelerate
adoption. For instance, many retail businesses didn’t want to use BTC and other cryptos due
to the lack of stability in its value, now, they have found a way to enjoy innovation without
being exposed to risk.
Among the most popular use cases of those stablecoins are the following:
Performance measurement
Remittance
Store of Value
Medium of Exchange
Unit of Account
Pegged lending
Smart insurance
As expressed a few paragraphs above, many of the stablecoins available in the market
have collaterals (meaning they are being backed by real fiat currencies like the US Dollar,
the Euro or the Sterling). Most of them, hold reserve equal to the amount of coins in
circulation. In other words, those assets are backed at a 1:1 ratio (one stable coin will be
equal to one unit of fiat.
Some of the most used ones are the US Tether (USDT), TrueUSD (TUSD), GeminiDollar
(GUSD), USD Coin (USDC) and Paxos Standard (PAX).
Stablecoins
1. Tether (USDT):
Launched in 2014, Tether is a blockchain-enabled platform designed to facilitate the use of
fiat currencies in a digital manner. Tether works to disrupt the conventional financial system
via a more modern approach to money.
Tether has made headway by giving customers the ability to transact with traditional
currencies across the blockchain, without the inherent volatility and complexity typically
associated with a digital currency. As the first blockchain-enabled platform to facilitate the
digital use of traditional currencies (a familiar, stable accounting unit), Tether has
democratized cross-border transactions across the blockchain.
1. USD Coin (USDC):
USD Coin (USDC) is a stablecoin fully backed by the US dollar and developed by the
CENTRE consortium. Coinbase customers with US dollar accounts may exchange 1 USDC
for US$1.00 (and vice versa) on Coinbase in jurisdictions where USDC support is available.
1. Binance USD (BUSD)
BUSD is a regulated, fiat-backed stablecoin pegged to the U.S. dollar. ... As a stablecoin,
BUSD is designed to maintain a stable market value. It allows investors and traders to hold a
low-volatility asset on the blockchain without the need to exit the crypto space.
1. Dai:
Dai (DAI) is a cryptocurrency token and operates on the Ethereum platform. Multi-Collateral
Dai, brings a lot of new and exciting features, such as support for new CDP collateral types
and Dai Savings Rate.
1. TerraUSD (UST):
TerraUSD is a native Terra stablecoin pegged to the US Dollar.
1. TrueUSD:
TrueUSD, a USD-backed stablecoin you can exchange and trust. 100% collateralized by
USD in legally-protected escrow accounts, with multiple bank partners, so you can trade,
send, and receive payments with peace of mind.
1. Paxos Standard (USDP):
Paxos Standard is regulated crypto asset. It is fully collateralized 1:1 by the U.S. dollar,
approved and regulated by the NYDFS, and enables instantaneous transactions.
1. Neutrino USD (USDN):
Neutrino USD (USDN) is an algorithmic crypto-collateralized stablecoin pegged to the US
dollar. All operations involving USDN, such as issuance, collateralization, staking, and
reward payouts, are transparent and governed by a smart contract.
1. HUSD:
HUSD is an ERC-20 token that is 1:1 ratio pegged with USD. It was issued by Stable
Universal, an entity that claims to follow US regulations.
1. Fei Protocol:
Fei Protocol ($FEI) represents a direct incentive stablecoin which is undercollateralized and
fully decentralized.
The goal of the Fei Protocol is to maintain a liquid market in which ETH/FEI trades closely to
the ETH/USD price. FEI achieves this via a new stability mechanism known as direct
incentives. Direct incentive stablecoins use dynamic mint rewards and burn penalties on
DEX trade volume to maintain the peg. FEI uses Uniswap as its incentivized DEX at launch.
Governance can add and update DEX integrations and other incentives as needed.
