Let’s begin by saying that the crypto world is often synonymous with wild price swings and volatility. Yet, amidst this turbulence, there’s a class of digital assets that aims to bring a sense of calm to this situation: stable cryptocurrencies.
The most used stablecoin
It’s important to note that no cryptocurrency is entirely immune to price fluctuations. However, stablecoins are a subset of cryptocurrencies designed to maintain a stable value by pegged to a reserve asset, such as a fiat currency or a commodity. Here are some of the most well-known and widely used stable cryptocurrencies:
Tether is a widely recognized stablecoin known for its close peg to the US dollar. It’s considered a go-to choice for traders seeking a stable trading pair within the crypto market. Tether claims to maintain a 1:1 reserve ratio, meaning it should have one US dollar reserve for every USDT in circulation.
USD Coin (USDC)
USDC is a stablecoin that has gained trust in the crypto community due to its strong regulatory compliance and transparency. It is fully backed by US dollars held in reserve accounts, and these reserves are regularly audited and published. USDC is widely used in various applications, including trading, decentralized finance (DeFi), and cross-border transactions.
TrueUSD is another fiat-collateralized stablecoin designed to maintain a 1:1 peg with the US dollar. Like USDC, it undergoes frequent audits to ensure its reserves are accurately represented. TrueUSD has found utility in trading, lending, and other DeFi applications.
DAI stands out as a decentralized stablecoin that isn’t backed by traditional assets but rather by collateral in the form of cryptocurrencies like Ethereum. It achieves stability through a decentralized system of smart contracts that automatically adjust the supply of DAI in response to market demand. DAI is favored by users who prefer decentralization and censorship resistance.
Binance USD (BUSD)
The Binance cryptocurrency exchange issues Binance USD and is fully backed by US dollars held in FDIC-insured accounts. It benefits from the trust associated with the Binance brand and offers liquidity for trading pairs on the Binance platform. BUSD is used not only within the Binance ecosystem but also across various exchanges and DeFi platforms.
It’s essential for users to research and choose stablecoins that align with their specific needs and use cases.