Stablecoin War: The Best Stablecoins in 2019
We know that the idea of cryptocurrencies is the total replacement of fiat money. However, being ever-volatile, altcoins arenâ€™t always a good solution for investment and storage. Thatâ€™s why another type of digital currency was created â€“ stablecoins. What is it?
Imagine that fiat money (papers that lose quality and have to be reprinted) is no longer a physical phenomenon, gets 100% digital and is protected against inflation. Thatâ€™s what stablecoins are about. In laymanâ€™s terms, stablecoins are the digital currencies pegged to the cost of fiat money, or any other asset. Ideally, stablecoins price equals the cost of the corresponding fiat (for instance, $1).
As we mentioned above, the value of such coins is tied to traditional assets (money or other values) in a ratio of 1: 1. This ratio is maintained throughout the life of the coin, regardless of market conditions. Price fluctuations up or down are possible, but they are insignificant.
However, the position of stablecoin directly depends on the situation with the asset that supports it. For example, if the dollar rises in price, the value of the coin tied to it will increase. If it goes down, then it will also drag the digital analog down.
Stablecoins are divided into 3 groups depending on the method of stabilization:
- Fiat-collateralized: supported by fiat money or physical values (Tether, TrueUSD);
- Crypto-collateralized: the price is tied to the value of other cryptocurrencies (Dai);
- Non-collateralized: the price is regulated by the issue of coins, but at the same time it is not supported by either traditional money or other cryptocurrencies (Carbon, Havven).
Thereâ€™s a growing number of stablecoins with the price pegged to gold. For instance, the value of Ethereum-based DigixDao cryptocurrency is backed up by golden coins stored in Singapore banks.
Without further ado, letâ€™s review best stablecoins 2019 and compare them for you to see which variant is more reliable and attractive. Our list of stablecoins includes currencies pegged to US dollar and other assets.
Tether (USDT) â€“ The Largest Stablecoin on the Market
The idea of the stablecoin created by Tether company was born long ago as in 2012! After being listed in exchanges in 2015, Tether has become one of the most popular and successful assets on the market being a quick and cheap way to transfer value from one exchange to another, without the need for using â€œunstableâ€� cryptocurrencies.
The convenience of Tether, as well as the fact that stablecoin was a substitute for the US dollar, appealed to both stock magnates and ordinary traders. Everyone simply used this payment instrument, not thinking about whether it was actually backed up with dollars or not.Â
In early 2017, USDT authors began to â€œprint moneyâ€�, as traditional banks in the US and other countries do. At first, they stated that they would not increase the money supply of stablecoin. But then they did the opposite, allegedly printing Tether for the sake of increasing the price of BTC in mid-2017.
Only after a significant number of fraud allegations hit Tether in mid-2018, the price of the asset fell from $ 1 per token to 85 cents. It failed because Tether sharply increased the number of tokens in the circulation, making it jerky until the market capitalization reached billions of dollars, whereas initially, Tether had only a couple of tens of millions. Being the stablecoin market monopolist, Tether started releasing USDT coins without being really backed up by the equivalent in the US dollar.Â
Despite all accusations, Tether stays the king in stablecoins list and is widely used by traders. According to Wall Street Journal, about 80% of all BTC trading is done with the help of USDT, so this stablecoin ensures liquidity on the crypto market.
- Founded: 2015
- Pegged to: US Dollar
- Market cap: $4 036 220 771
- Circulating supply: 4 042 555 317 USDT
- Historical price fluctuations: $0,84 – $1,21
- Website: https://tether.to/Â
- Traded on: Binance, CoinSpot, BitFinex, Kraken
- Mechanism of stabilization: Each USDT Collateralized token has a corresponding $1 U.S. invested in an owned account
Buy Tether Stablecoin
At the moment it is one of the most reliable and proven stablecoins, as the company creating it has an open and transparent policy. The first independent audit was conducted on March 1, 2018, proved that almost $ 1.8 million is actually backing up TrustToken reserves. Today, TUSD ERC-20 token is the best stablecoin on Binance and its price keeps at $1 level.
At the moment, 100% is secured by US dollars on legally protected escrow accounts with several partners of the bank so that you can trade, send and receive payments with peace of mind.
How does TrueUSD work?
Buyers pass the KYC / AML check and send USD to the trust company with an escrow agreement. When they check your funds, their API instructs our smart contract to issue the equivalent TrueUSD to your Ethereum public address.
To redeem the US dollar, you transfer the KYC / AML check, send a smart contract with your TrueUSD tokens from the Ethereum registered address, and then the escrow bank will send you the funds. Your property on the account is legally recognized, and every 1 TrueUSD token you receive reminds of a redeemable certificate of ownership for $ 1 through escrow.
- Founded: 2018
- Pegged to: US Dollar
- Market cap: $194 908 143
- Circulating supply: 194 403 771 TUSD
- Historical price fluctuations: $0,934 – $1,36
- Website: https://www.trusttoken.com/trueusdÂ
- Traded on: Binance, Bittrex, OKEx, CoinEx, KuCoin\
- Mechanism of stabilization: Every TUSD token is backed by $1 U.S. held in an escrow account by third parties.
Dai (DAI): Crypto-Collateralized Stablecoin
Although the price of Dai stablecoin also equals $1, Dai is backed by Ethereum-based smart contracts with redundancy. Dai is stabilized by external market factors such as collateralized debt positions (CDPs), autonomous response mechanisms, and external economic incentives. Dai is more decentralized because only users can create and destroy the token (DAI tokens appear only after the deposit has been paid and disappear after payment of the debt).
Being issued on MakerDAO platform, DAI is more transparent and fair than Tether â€“ all operations are run by the smart contract. 71th cryptocurrency by market cap, DAI proves to be efficient for betting, financial markets, international trading, and transparent audit.
It should be noted that Maker also gives users the chance to choose the collateral types:
- Founded: 2017
- Pegged to: US Dollar (backed by ETH)
- Market cap: $78 554 998
- Circulating supply: 78 030 430 DAI
- Historical price fluctuations: $0,72 – $1,37
- Website: https://makerdao.com/en/dai/Â
- Traded on: HitBTC, Coinhub, Etfines, Gate.io, DDEX, OasisDex
- Mechanism of stabilization: For the generation of Dai tokens, users need to purchase and stake an equal value (in USD) of Ethereum tokens. When the cost of Dai rises, users will be incentivized to create more. If the price falls, users will be incentivized to sell their DAI back to the pool.
USD Coin (USDC): A Stablecoin by Coinbase
USD Coin is the stablecoin crypto created by Coinbase and Circle company. Itâ€™s positioned as a stablecoin that has financial and operational transparency. The exchange of cryptocurrency for fiat is carried out in the Circle USDC application which emits cryptocurrency. All functions that users perform through banking systems are available in the application: conversion, money transfers and others.
This Coinbase stablecoin can be emitted by banks. Center focuses on the global market and plans in the to attract more international banks for that. It partners with such companies as Goldman Sachs, Bitmain, Blockchain Capital and others.
Hereâ€™s one more proof of its success:
- Founded: 2018
- Pegged to: US DollarÂ
- Market cap: $420 826 410Â
- Circulating supply: 418 441 310 USDC
- Historical price fluctuations: $0,97 – $1,11
- Website: https://www.circle.com/en/usdcÂ
- Traded on: Coinbase, Poliniex, Binance, KuCoin, Okex, Bit-Z, and others
- Mechanism of stabilization: Each USDC token is backed up by $1 the U.S. invested in an owned account. Circle company ensures low fluctuations.
Paxos Standard Token (PAX)
This popular stablecoin was created as the alternative to Tether (USDT). PAX is traded in conjunction with other assets that are available on the site. In particular, you can use PAX to purchase or sell Bitcoin, Ethereum, Binance Coin, EOS, XRP, as well as Stellar Lumens. Being a ERC-20 token, Paxos ensures transparency. While PAX coins are circulating, US Dollars are hold in reserve at FDIC-insured US banks and after redeeming, the PAX coins are destroyed.
PAX has become #39 coin in Top-100 cryptocurrencies. One of the main reasons for it is easy integration of Paxos payments: itâ€™s a safe and reliable instrument for transactions. What else makes it superb?
- Absence of transaction fees;
- 24/7 customer support Ethereum-based transactions;
- Attestation by Withum company;
- Full backing up by US dollar.
Paxos stablecoin has already gone through two audits, both successful: specialists of Nomic Labs claimed they revealed no issues.
- Founded: 2018
- Pegged to: US DollarÂ
- Market cap: $180 536 144
- Circulating supply: 185 817 402 PAX
- Historical price fluctuations: $0,97 – $1,10
- Website: https://www.paxos.com/pax/Â
- Traded in: Coinbase, Cex.io, Coinmama
- Collateralized 1:1 by the USD, controlled and regulated by the NYDFS.
Stablecoin Wars Bottom Line
Itâ€™s hard to select the best stablecoin in 2019: each asset has its pros and cons. Although Tether is the most popular asset of its kind, itâ€™s far not the most reliable one â€“ in 2018, numerous safer alternatives appeared on the market. Below, you can check the stablecoins comparison:
|Stablecoin||Year Launched||Pegged to||Market cap||Supply|
|Tether (USDT)||2015||US Dollar||$4 036 220 771||4 042 555 317 USDT|
|True USD (TUSD)||2018||US Dollar||$194 908 143||194 403 771 TUSD|
|DAI||2017||US Dollar||$78 554 998||78 030 430 DAI|
|USD Coin (USDC)||2018||US Dollar||$420 826 410||418 441 310 USDC|
|Paxos (PAX)||2018||US Dollar||$180 536 144||185 817 402 PAX|
While USD-pegged crypto assets are on the rise, there are a number of non-collateralized and crypto-collateralized currencies developing. For instance, Carbon and Havven are getting more popular.
Facebookâ€™s Libra is also entering the market and it has all chances to set the new standards in the industry, if it manages to survive the hearings in the U.S. Congress. We’ll keep you updated on this continuous stablecoin war.