The 5 biggest stablecoins

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Not all cryptocurrencies are prone to volatility. Some are specifically designed to maintain a fixed price - such coins are called stablecoins.These days, tokens and coins can collapse in a day, so people need a stable token to hold their capital regardless of market conditions.

What is stablecoin?

A stablecoin is a blockchain token whose exchange rate is pegged to the exchange rate of a stable currency, such as USD, EUR, e.t.c., at a ratio of 1:1. Ideally, each Stablecoin would replace regular money. This means that it would act as a unit of account, allowing you to buy and sell goods and services, compare their value, and also serve as a means of saving capital. But, in order to do that, the stablecoin must have real security, adapting digital technology to the conditions of the modern market.

Top 5 Stablecoins at the moment.

$USDT

Centralized Stablecoin. Capitalisation $79,733,897,183. https://tether.to/   Secured by the company's physical financial reserves. Net foreign exchange reserves are approximately $4,200,000,000. The rest of the collateral consists of short-term debt issued by corporations, negotiable short-term deposits issued by financial institutions, securities, loans and investments in other cryptocurrencies.

In simple terms - the operation is linked to banks and therefore cannot be fully decentralized, if it strongly defies global movements, will receive denial of support = will lose credibility.

Risks: The Smart Contract has a blacklisting mechanism by wallet number. Risks of global economic deterioration and borrower bankruptcies. Risks associated with US legislation.

$USDC

Centralised Stablecoin. Capitalized at $52,862,157,605 https://www.centre.io/usdc . Secured by $USD cash and assets of equivalent value held in accounts with US regulated financial institutions. There is no published information on the ratio of USD USD to other financial assets secured by the USDC.

Goes against US policy = may lose collateral.

Risks: The Smart Contract has a blacklisting mechanism by wallet number. Risks of worsening global economic conditions. Risks associated with US legislation.

$BUSD

Centralised Stablecoin. Capitalisation $17,937,009,404. https://www.binance.com/ru/busd . Emits token and holds reserves https://paxos.com/busd/ .  It is backed by $USD cash and U.S. government debt. No information on the $USD/debt ratio is published.

Goes against US policy = may lose collateral.

Risks: The smart contract has a blacklisting mechanism by wallet number. Risks of worsening global economic conditions. Risks associated with US legislation.

$DAI

Decentralised super-secured stablecoin. Capitalised at $9,723,503,499. https://oasis.app/ . Secured by cryptocurrencies. Current collateral ratio of 160%.    

Risks: A third of the collateral as of today, is USDC, thus DAI inherits the corresponding risks.  Risk of losing the 1:1 peg to the dollar equivalent due to a sharp change in the value of the collateral assets or an error in the smart contracts.

$TUSD

TrueUSD is a U.S. dollar stablecoin pegged to USD at 1:1. First launched to a limited investor base in January 2018, TrueUSD has since grown to incorporate almost $400 million of backed tokens as of October 2020.

TrueUSD is one of a number of cryptocurrency stablecoins administered by TrustToken, a platform for tokenizing real-world assets.

As with other stablecoins, TrueUSD aims to facilitate increased liquidity and provide cryptocurrency traders and general users with a nonvolatile asset relative to free-floating tokens such as Bitcoin (BTC). Capitalisation $1,273,462,383 TrueUSD’s equivalent redeemability for USD is maintained via partnerships with banks and fiduciary entities.

How are Stable Coins used?

Like most digital assets, Stable Coins are mainly used as a store of value and a medium of exchange. They give traders a temporary respite from volatility when the market goes down, and can also be used in the fast-growing world of decentralised finance (DeFi) for things like income farming, lending and providing liquidity.

Most traders and investors gain access to Stable Coins by buying them on exchange platforms, but it is also often possible to mint fresh Stable Coins by contributing the necessary collateral to the issuing company, such as US dollars or physical gold with CACHE gold.

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