Talk about an exciting crypto type is what got me to writing this article.
The USP of this type of crypto is that unlike others, it is stable in its price. Strange, right?
Stable in the sense that its value in USD or EUR doesn’t fluctuate like Bitcoin and Ethereum.
But there is more to it.
Stablecoins are a new genre of cryptocurrencies which weren’t thought of or were not possible before. And now, after 9 years of the launch of first successful cryptocurrency Bitcoin, you have a plethora of options to choose amongst stablecoins.
Stablecoins, as we discussed earlier, are of three types. I am not going to get into detail again, but I will leave you with the link to my previous article: What are StableCoins
However, we are going to look at some stablecoins in each category to understand them better.
6 Best Stablecoins In The Cryptosphere
1. Tether (USDT)
Tether is the first well-known stablecoin which started in early 2015.
It is a fiat-collateralized stable cryptocurrency, meaning, it is backed by fiat currency in a 1:1 ratio. And USDT token, which is also an ERC-20 token, is backed by US dollars in 1:1 ratio and is believed to be maintained by this team.
But controversies have surrounded Tether over the last year where it has been found that Bifinex, a popular Bitcoin exchange, is behind stablecoin. And they have been using it o manipulate the markets as fiat-collateralized stablecoins are the easiest to manipulate.
Plus, they have been issuing millions of USDT without proper audit process in place which seems contrary to their initial promise.
Nevertheless, it the most widely used and adopted stablecoin right now in the crypto market with a humongous market cap that puts it in top #10 of CoinMarketCap.
2. TureUSD (TUSD)
TrueUSD, as its name suggest, is another USD-backed ERC20 stablecoin.
On the first look, it seems just like USDT but unlike it, TrueUSD is fully fiat-collateralized, legally protected, and transparently verified by third-party attestations.
Their attestations are made public regularly and anyone can receive the reports on Twitter:
— TrustToken (@TrustToken) July 3, 2018
The token is managed by real people who have worked previously with Google, PwC, and UC Berkeley. (See here)
The company plans to tokenize other real-world assets such as TrueEuro, TrueBond, TrueYen, etc. so that stability can be brought to the volatile world of cryptocurrencies.
TureUSD’s market cap currently is quite humble as compared to USDT and sits in top 150 cryptocurrencies at the moment, but its acceptance is increasing rather swiftly as the crypto market is expanding.
3. MakerDAO (DAI)
MakerDAO is a decentralized autonomous organization which has proposed a new approach for making stablecoins.
MakerDAO started in early 2017 and proposed to peg its stablecoin, known as DAI to US dollar. However, it is not backed by USD like USDT or TUSD. Instead, it is backed by Ethereum.
So that’s why it is a classic example of stablecoins that are backed by other cryptocurrencies and are known as crypto-collateralized stablecoins.
But MakerDAO and DAI have been criticized for being highly complex to be understood by other market players. Their model hasn’t been well tested either.
That’s why DAI’s acceptance as a stablecoin has been quite slow and unheard.
Basis, formerly known as Basecoin, is another stablecoin but it is relatively new in the cryptosphere, and that’s why it is yet to make its mark.
But their approach to making a stablecoin is quite simple and unique, and that’s why it has made it to our list.
Basis, is a non-collateralized stablecoin, meaning it is not backed by anything.
Wondering how that happens now?
Well, even I did when I first heard of it but it is a simple protocol that contracts and expands the coin/token supply. Hence, it can keep the price stable. It looks very familiar as the central banks work in this fashion.
And that’s why they started out with the name Basecoin – a stable cryptocurrency with an algorithmic central bank.
Carbon is another price-stable cryptocurrency which is a non-collateralized stablecoin too.
But it is not based upon the standard blockchain that we have seen so far. Instead, it is hosted on Hashgraph. (Read more about Hashgraph here)
Carbon achieves its price stability by an algorithmic biding which helps in consensus and figuring out the right price of each Carbon.
It also contracts and expands its supply based on the data points received through the algorithmic biding with the help of smart contracts.
Through this, their mission is to create a more inclusive and efficient global economy by using Carbon as a trading pair, global payment network etc.
Havven seemed to me like a unique stablecoin, but on further digging, I found that it is a crypto-collateralized stablecoin.
Their approach, however, is very different. It uses the maker/taker market philosophy to achieve the required stability.
Havven has implemented the two token structures to implement its stablecoin – Havven and Nomin. Nomin is the stablecoin, Havven the crypto collateral.
Havven has a fixed supply and Nomin (or eUSD) has the floating supply and derives its value from the Havven collateral. And as it is eUSD, its value is pegged to USD’s value.
Havven holders collateralize the Havven in a distributed way and receive the transaction fee from eUSD users (Nomin users).
They are also responsible for contracting and expanding the supply of Nomin, based on the number of Havven’s collateralized.
Ownership of Havvens grants the right to issue value of Nomins proportional to the dollar value of Havvens placed into escrow.
Conclusion: Stable Cryptocurrencies
I believe stablecoins have a long way to go in proving their worth and usability in the long term and that will happen on in events of the crisis.
What kind of crisis?
Well, I don’t know that, but the financial world calls it the black swan event.
So far TrueUSD, USDT, DAI are doing an excellent job though there are some controversies and arguments about their long-term sustainability.
Lastly, there is, of course, a need of a stablecoin in the market that works irrespective of the conditions in the cryptosphere and is easy to liquidate.
Now you tell me: What do you think of stablecoins? Have you used any of these stablecoins before? Which of these will survive the hard times? Do you know anymore stablecoins that I have missed here? Let us discuss in the comments below 🙂
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