A Comparison of Top 7 Best Stablecoins of 2021
In our previous post about stablecoins, we learned why stablecoins are an essential part of the crypto industry and how they enable more advanced decentralized finance applications. On March 30th 2020, Bitcoin.com reported the stablecoin market cap crossed $7 billion.
In this post, we’ll explore the top 7 list of best stablecoin of 2021.
#1 Fiat-Collateralized Tether
Tether (USDT) is the foremost popular stablecoin and one that many consider the best stablecoin on the market. Tether itself is fiat-collateralized with a 1:1 ratio. This means that every USDT is backed by one dollar.
Tether tokens are issued via the Bitcoin blockchain using the Omni Layer Protocol. It’s a very price-stable stablecoin that comes with a low risk. If you take a look at the Coinmarketcap price graph, you can see Tether does a great job at keeping its value around $1.00.
The main goal of Tether is to serve as a gateway between fiat and cryptocurrencies. Users who want to quickly jump into a trade but don’t want to use a centralized exchange can park their fiat money with Tether tokens.
Besides, it’s an easy gateway for new users to altcoins. Often, users can’t buy altcoins directly with fiat money. Therefore, it’s much easier for a new user to convert their fiat into stablecoins from which they can buy altcoins.
#2 USDCoin (USDC) - Coinbase Stablecoin
USDC or USDCoin is a fiat-collateralized stablecoin created by the joint venture between Coinbase and Circle. Coinbase being one of the most popular crypto exchanges has increased the popularity of USDCoin, making it a competitor for best stablecoin on the market.
The USDC token is actually an Ethereum-based token, and therefore, is distributed on the Ethereum blockchain. One USDC is a 1:1 representation of a US dollar. The Ethereum blockchain is actually important for USDC. An ERC-20 smart contract controls the issuance and the redemption of USDC tokens.
Further, the tokenization process of US dollar into USDC happens in three steps:
- A user who wants to acquire USDC can send US dollars to the USDC issuer’s bank account.
- The token issuer issues the corresponding number of USDC tokens via the USDC smart contract on the Ethereum blockchain.
- The user receives its USDC tokens while their US dollars are kept in the reserve.
It’s a simple but effective process for minting new USDC tokens. USDC is a popular stablecoin with high volume, for this reason it deserves a spot in the best stablecoin list.
#3 TrueUSD (TUSD) by TrustToken
TrueUSD is a fiat-collateralized stablecoin on the Ethereum blockchain as an ERC-20 token. The token has been issued by TrustToken which is a platform that creates different asset-backed token options. They offer many other stablecoins such as TCAD, TAUD, TGBP, or THKD. For example, the Hong Kong Dollar backs the THKD stablecoin.
In their blog, TrustToken explains what TrueUSD stands for. “TrueUSD is a USD-backed ERC20 stablecoin that is fully collateralized, legally protected, and transparently verified by third-party attestations. TrueUSD uses multiple escrow accounts to reduce counterparty risk, and to provide token-holders with legal protections against misappropriation.”
If you want to buy TUSD, you’ll have to complete the KYC and AML process first. When your identity has been verified, you’ve to transfer funds to a third-party escrow account. Just as with USDC, the smart contract will mint new TUSD tokens. Many stablecoins have adopted this process as it’s simple and easy to implement.
#4 PAX Standard Stablecoin by Paxo
PAX Standard sits on the fourth place in this best stablecoin list. It has an average 24-hour trading volume of around 250 million US dollars. PAX is available at a 1:1 ratio with the US Dollar. Again, the PAX stablecoin is issued on the Ethereum blockchain and can be stored in any Ethereum wallet that supports the ERC-20 protocol.
Moreover, the company focuses on branding itself as a trustworthy and reliable stablecoin issuer. For that reason, Paxos has been registered under the New York State banking law. Although, they do not operate as a bank. A bank has the intention to make profits using clients’ funds. Paxos brands itself as a trustworthy custodian that safely stores the deposited funds of customers. They ensure that every PAX is backed by one dollar.
#5 Binance USD (BUSD)
On September 5th of 2019, Binance announced the launch of its BUSD stablecoin, backed by US dollars on a 1:1 ratio. This is an important move for Binance which also runs their popular crypto exchange. During an interview, Binance CEO Changpeng Zhao, explained why they have developed Binance USD:
“We hope to unlock more financial services for the greater blockchain ecosystem through the issuance of BUSD, including more use cases and utility through the power of stable digital assets.”
A few months later, we can indeed find more advanced financial services on Binance’s platform. At the moment, Binance offers savings products where you earn an interest on your locked tokens.
Further, BUSD plays an important role on the platform in regards to fees. Users who hold Binance USD have to pay lower fees for transactions. In short, Binance did a great job at unlocking more financial instruments with the creation of their Binance token.
#6 DAI Stablecoin by Maker
Next, Maker or MKR is a cryptocurrency created on the Ethereum blockchain and is one of the most unique options on this best stablecoin list. MKR has been created to stabilize the value of the DAI stablecoin. This means DAI is a crypto-collateralized stablecoin that follows the value of one US dollar.
The goal of MKR is to stabilize this value of DAI through smart contracts using Collateralized Debt Positions (CDP). As a blockchain stores every transaction on the blockchain, there is no need for a central organisation to verify the stablecoin.
#7 StableUSD (USDS) by Stably
Stably is the startup behind the StableUSD token. The StableUSD stablecoin is pegged against the US dollar at a 1:1 ratio. The collateral itself is held by Prime Trust, an American trust company. StableUSD is slightly different from other fiat-collateralized stablecoins as they allow you to deposit cryptocurrencies such as Bitcoin, Ethereum, or the USDT stablecoin to buy USDS tokens.
YouHodler and crypto savings accounts: the best stablecoin passive income
YouHodler provides you with the ability to deposit stablecoins into their savings account to earn a passive interest of up to 12% APR on your crypto (the best stablecoin interest rate on the market). It allows you to grow your capital in a safe way by taking advantage of the low-volatile nature of stablecoins. Currently, YouHodler supports the following six stablecoins: USDT, PAX Gold, PAX, TUSD, HUSD, USDC and DAI
In other words, crypto provides a great alternative for a traditional savings account with your bank. Negative interest rates are a well-bespoken topic that can become reality in the near future. This means you’ll have to pay your bank to hold your assets. YouHodler’s mission is to help users try out crypto products without exposing them to the underlying technicalities of blockchain technology while still taking advantage of its benefits. You can get started with YouHolder via the Crypto Savings product.