Top 5 Stablecoin Research
It seems like in the span of just a couple years stablecoins are seemingly everywhere. I've never stopped to dig into each one and understand fundamentally how they differ.
The top 5 stablecoins in use are all 1B+ market cap coins.
Looks like the explosion really kicked off in mid 2018 with a number of stablecoins taking a bite into Tether dominance.
USDC emerged quickly as a competitor along with PAX and GUSD, however over time the latter two coins have slipped in terms of maintaining market dominance.
Simply put, a stablecoin is an asset class that is backed by reserve assets in order to maintain price stability.
As a cryptocurrency it maintains the core advantages of security and speed of transaction, with much less exposure to volatility.
It's a bit crowded in this kingdom! But in this case choice is to our benefit, with many exchanges offering multiple stablecoins to choose from.
I use stablecoins for much of my trading, so I'll use whichever stablecoin has the best pair in terms of volume. For this reason I primarily trade within USDT (Tether) as there's tons f high volume pairs on Binance.
But what if I'm simply storing a portion of my portfolio in stablecoins, for the medium to long term to have cash on hand essentially. Is there reason to use one coin over the other, that's really what I want to know.
Tether was launched as RealCoin in July 2014 and was rebranded as Tether in November by Tether Ltd., the company that is responsible for maintaining the reserve amounts of fiat currency. It started trading in February 2015. -www.investopedia.com
USDC is issued by regulated financial institutions, backed by fully reserved assets, redeemable on a 1:1 basis for US dollars, and governed by Centre, a membership-based consortium that sets technical, policy and financial standards for stablecoins. -www.circle.com
BUSD is a U.S.-regulated stablecoin, fully backed by U.S. dollars: 1 BUSD = $1.00 USD. BUSD offers faster ways to fund your trades and is acceptable as a medium of exchange, store of value, and method of payment across the global crypto ecosystem. -www.binance.us
The world’s first unbiased currency. Dai is a stable, decentralized currency that does not discriminate. Any individual or business can realize the advantages of digital money. -www.makerdao.com
Use Paxos to Build your Stablecoin. As the creators of the industry’s first and most liquid regulated stablecoin, Paxos Standard (PAX), Paxos has unique expertise in the market. Our white-labeled Stablecoin as a Service offering lets partners leverage that expertise to create their own stablecoins quickly and securely. -www.paxos.com
From what I can gather the most important elements of modern stablecoin is regulatory approval, regular transparent audits, and 1:1 backing with US dollars.
The more I look into stablecoins, the more I realize they're not all equal. Tether seems sketch, so for that reason I'll limit it's use to short term trading on exchanges.
For me the choice is pretty clear, USDC and DAI take the cake!
USDC is issued by company registered as a Money Service Business in the United States, it's regulated and is subject to regular audits.
DAI is a decentralized and I had no idea it's governed by the Maker Protocol. It's open source, and uses smart contracts on the Ethereum blockchain. Powerful!
I'll put BUSD as a close third but with ties to CZ and Binance, I'll remain somewhat skeptical about it's place in the stablecoin world. However they did go through PAX so it should be regulated for US finance, and reserves audited.
As the use cases for US Dollar-backed stablecoins continues to rise, I have to say I would be open to being paid directly from a company in USDC or DAI. As long as their backing assets are subject to regular audits with a considerable amount of transparency I'm on board..
Ciao for now,
@agr8buzz