Crypto Investing
8 Feb 2021

5 Stablecoins To Look Out For In 2021

Farheen Shaikh

Stablecoins are cryptocurrencies without volatility, and they were never so important than now.

2020 has been a booming year for cryptocurrencies with its far and wide individual and institutional adoption. With the rise and fall of so many cryptocurrencies in the market, everybody is looking for stability in this volatile market.

And Stablecoins play the crucial role of providing stability.

Stablecoins are cryptocurrencies tied to external assets like fiat, gold etc. and thus experience meagre price fluctuations. They come extremely handy for investing in foreign currencies and other commodities without physically owning them. Apart from that, you can also use stablecoins to pay for services without worrying about price fluctuations.

Basically, Stablecoins help you leverage Blockchain and Decentralisation without the risk of volatility.

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5 Stablecoins To Look Out For In 2021

Having said that there are several stablecoins out there backed with varying assets but some interesting ones to look at are here:

1.Tether (USDT)

Tether is a fiat collateralised stablecoin that mirrors the value of the U.S dollar and is backed by it on a 1:1 ratio. The sum equivalent to the no. of USDT tokens in circulation is kept in reserve to maintain the peg.

USDT is built on Bitcoin’s blockchain and was originally launched in 2014 by a Hong Kong based company Tether.Tether aims to enable individuals and businesses to leverage the trustless blockchain ecosystem to enable faster and secure transactions.

Currently, Tether is the third-largest cryptocurrency by market capitalisation.

Want to buy Tether directly in India? Check out the CoinSwitch website!

2.TrueUSD (TUSD)

Like USDT, TUSD is also a fiat-backed stablecoin pegged with the U.S dollar on a 1:1 ratio.

However, the team at TUSD is comparatively more transparent than Tether. Right from its launch, the token’s parent company, TrustToken, has acknowledged the importance of third-party verification.

They claim to be the first regulated stablecoin fully backed by the U.S dollar and attested by a third party. They also provide real-time data of their token’s backing and reliability to enhance trust in the stablecoin.

3.USD Coin (USDC)

USDC again is a U.S dollar-backed stablecoin; however, the reserve held against this stablecoin is a combination of cash and short term U.S treasury bonds.

Centre Consortium has built the USDC token. The mantra behind USDC is “digital money for the digital age” which makes sense because the paper money is now digitised enabling people to transact money at lightning speed with minimum cost.

Also, USDC has the largest stablecoin ecosystem that various companies and products support.

4.Dai (DAI)

Dai is a Crypto (Ethereum) backed stablecoin; Unlike the fiat collateralised tokens, the Maker protocol manages Dai’s issuance and its peg. 

Even though Dai mirrors the U.S dollar and is valued very close to it, it is not collateralized with it, but Ethereum.

Here, Individuals deposit their Ethereums into a pool as collateral and receive Dai tokens in return which they can then use just like any other crypto. But since a volatile asset collateralises Dai, the Maker protocol helps maintain its stability by either creating or destroying Dai tokens.

5.Paxos Standard (PAX)

PAX is also a fiat collateralised stablecoin backed by the U.S dollar on a 1:1 ratio. The token is regulated by the New York State Department of Financial Services. 

Paxos intends to facilitate the fast movement of money; however, today, the token is used to limit exposure to volatility. But eventually, it aspires to be an efficient way for transacting payments and transferring assets.

The Bottom Line

All stablecoins, in essence, are cryptocurrencies pegged with external assets; however, the difference and their uniqueness lie in the team building the projects and its long term vision.

And with over 200 stablecoins out there above were just a few exciting stablecoins with some great teams behind them. However, it is also true that several other stablecoins can also serve the purpose to give you stability in a volatile market.

So ensure you do your own research before making any investment decision.

[su_note] KuberVerse is an educational initiative. Anything expressed here directly or indirectly is not investment advice. And we ask you to do your own research before investing. [/su_note]

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

writer

Farheen Shaikh

Content Writer

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