7 Best Stablecoins: A Definitive Guide | Dollar Bureau

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7 Best Stablecoins: A Definitive Guide

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Stablecoins are digital tokens pegged to tangible assets like gold or fiat currencies. They aim to provide stability to the volatile cryptocurrency markets.

There are several stablecoins currently circulating in the market, each with its unique features. Some are backed by fiat currencies, some by precious metals, and others by cryptocurrencies.

This guide goes through what you should look for when choosing a stablecoin and the 7 best stablecoins based on market capitalisation.

What to Look Out for When Choosing a Stablecoin

It is never wise to buy stablecoins, thinking that this is the only way to avoid all risks that come with other cryptocurrencies.

If you’ve set your mind and genuinely want to get your hands on some stablecoins, here is what to look for in the best stablecoin:

The type of asset – The first thing you should do is check the resources tied to the stablecoins you want to purchase. There are several types, and each is always tied to some asset.

The value of the asset – Because stablecoins depend on how much the asset is worth, it would be best to check the current value and maybe research some predictions around it. Ordinarily, stablecoins are tied to USD, Euro, or gold, which is not that susceptible to fluctuations. However, if you’re planning to invest in crypto-backed stablecoins, then this is a must.

Transparency – Some companies give out a huge amount of stablecoins. And for each one, you have to have the equivalent number of the asset.

For example, if Tether has a circulating supply of 11.87 billion UST, then it means that it must have $11.87 billion in its reserves. We can only know if this really is true from audits. So, always make sure to look for a frequently audited company and always transparent with its assets.

Licenses – You should make sure the company giving out the stablecoin is a legitimate one. But, this also refers to the crypto exchange you’re investing in. The easiest way to check this is through their license.

Fees – Always check the fees connected to the stablecoin you choose.
Are there any withdrawal or deposit fees? Are there fees to transfer your stablecoins to other types of cryptos or vice-versa?

The Best Stablecoins on the Market

Here’s a table comparing the best stablecoins in the market.

Stablecoin Main Asset
Tether (USDT) Fiat-backed
USD Coin (USDC) Fiat-backed
TerraUSD (UST) Algorithm-backed
DAI (TUSD) Crypto-backed
TrueUSD Fiat-backed
Pax Dollar (USDP) Fiat-backed
StraitsX Singapore Dollar (XSGD) Fiat-backed

The above stablecoins are in order by market cap – highest to the lowest. As for the top stablecoin contenders on today’s market, let’s break them down one at a time.

Tether (USDT)

Type of Holding Percentage
Cash and Cash Equivalents:

  • Commercial paper
  • Treasury bills
  • Reverse repo notes
  • Cash and bank deposits
  • Money market funds
84.25%

  • 52.51%
  • 33.35%
  • 0%
  • 12.42%
  • 1.72%
Corporate Bonds, Funds, Precious Metals 5.22%
Secured Loans 4.99%
Other Investments and Digital Tokens 5.54%
  • Circulating Supply: 78.69 Billion USDT
  • Market Capitalisation: $78 billion
  • Volume in the last 24h: $57 billion
  • Price: $1

 

Tether is currently the most sought out stablecoin. All Tether coins are 100% backed by Tether’s reserves, which are published on the website.

Namely, Tether is a fully transparent company that shows its current total assets and reserves and makes sure they are updated daily.

Tether remains the leader in the stablecoin category 8 years after its initial release. It first came out under the name RealCoin in 2014 and was the first officially accepted stablecoin globally.

Currently, Tether has more than a $78 billion market cap. This stablecoin is fiat-based, i.e. it is tied to 3 different fiat currencies – USD, CNH, and EUR. USD is the one that holds the top.

All tokens are matched 1:1, which simply means that for each $1 you get 1 USDT.

84.25% go to cash and cash equivalents from all of its assets.

Corporate bonds, precious metals and funds are only 5.22%, just below the 5.54% that mainly goes to digital tokens.

Lastly, 4.99% of the assets are reserved for secured loans.

Also, the most significant percentage from their cash and cash equivalents funds go to commercial paper – 52.51%. This is what actually makes Tether a secure stablecoin.

A fun fact about this stablecoin is that in 2021 the company paid out a settlement based on the prosecution from the New York attorney general’s office.

Namely, they argued that Tether wasn’t transparent enough with their assets. This led to Tether having a separate part on its page dedicated to transparency.

However, there is a larger liquidity risk involved when choosing Tether as their assets are not easily converted to cash should there be a mass withdrawal.

Despite this, Tether remains the largest stablecoin and has the most trading pairs available across many crypto exchanges.

USD Coin (USDC)

Type of Holding Percentage
Cash and Short Duration US Treasuries 100%
  • Market Capitalisation: $52 billion
  • Circulating Supply: 52.48 billion USDC
  • Volume in the last 24h: $3 billion
  • Price: $1

 

USDC is a stablecoin pegged to the US dollar, regulated by Center. This is a consortium founded by Circle and backed up by members from the well-known Coinbase and Bitman – a company known for mining Bitcoins.

By market assets, USD Coin is the second-largest stablecoin today. Its volatility is better than Tether’s, making it a cryptocurrency worth investing in.

USDC is tied to the US dollar, and all of its assets are fully committed toward it. Namely, this stablecoin is 100% placed in cash and short duration US treasuries.

Interestingly, USDC’s reserves are certified every month by a Chicago-based accounting firm – Grant Thornton LLP. However, despite this fact, they have still not been audited.

In the latest report by this firm, USDC had around $42 billion market cap. At the time of writing this piece, it rose to more than $52 billion.

TerraUSD (UST)

Type of Holding Percentage
All Assets 0% (algorithm based stablecoin)
  • Market Capitalisation: $11 billion
  • Circulating Supply: 11.87 billion UST
  • Volume in the last 24h: $399 million
  • Price: $1

 

You must be wondering why all assets at TerraUSD are based at 0%. UST is an algorithm-based stablecoin, which tries to keep the volatility of this coin as close as possible to the US dollar.

To do this, TerraUSD is stabilised by Terra’s own crypto – LUNA.

This works quite simply. LUNA is exchanged for dollars or UST, which naturally makes the assets pool and the value of UST grow.

Because the algorithm sees that the rate of UST doesn’t go over $1, it starts to contract and spread the amount to its users.

That way, it comes back to the original value. This algorithm has enabled TerraUSD to take a current market cap of $11 billion.

DAI

Type of Holding Percentage
Crypto Assets 100%
  • Market Capitalisation: $10 billion
  • Circulating Supply: 10.22 DAI
  • Volume in the last 24h: $308 million
  • Price: $0.99

 

When you first read about DAI – a stablecoin maintained by MarketDAO, you might get quite confused about what supports it.

Although DAI is soft pegged to the US dollar, it is also backed by several cryptos, most notably Ethereum.

It tries to stay as close as possible to the US dollar by using Ethereum smart contracts. This makes DAI a decentralised, overcollateralised stablecoin.

Currently, it tries to stay on a 1:1 ratio with the US dollar.

To put it as simple as possible, DAI is not fiat-backed but only tries to gravitate toward $1 per trade. It is, however, crypto-backed, meaning that there are Ethereum coins deposited in MarketDAO’s vaults.

So, when you take DAI currency out, this acts as collateral.

DAI’s current market cap is $10 billion.

TrueUSD (TUSD)

Type of Holding Percentage
Cash 100%
  • Market Capitalisation: $1 billion
  • Circulating Supply: 1.42 billion TUSD
  • Volume in the last 24h: $120,681,712
  • Price: $1

 

TrueUSD is the first regulated stablecoin that is pegged to the US dollar. Namely, TrustToken Inc. – the company behind this stablecoin – wanted to make sure that this stablecoin won’t be used for any fraudulent activities.

For that same reason, they put some regulations with the help of a state financial institutions regulator, i.e. several unaffiliated third-party companies in Nevada.

The stablecoin is audited by Cohen & Company – a tax and crypto audit firm.

TrueUSD works on the ERC-20 tokens, specifically on the Ethereum blockchain and is wholly legalised and verified by third-party affirmation. With this, TrueUSD maintains a value of $1.

This stablecoin is backed up by US dollars kept in multiple escrow accounts by banks to ensure safety and legal sanctions against embezzlement. It is the first token built on the TrustToken website, which is where you can purchase the stablecoin and later redeem US dollars.

As of right now, the market cap of this stablecoin is around $1 billion. But the best part about this stablecoin is that TrustToken doesn’t charge any fees on its TUSD.

Pax Dollar (USDP)

Type of Holding Percentage
Cash 100%
  • Market Capitalisation: $945,525,430
  • Circulating Supply: 945,642,940 USDP
  • Volume in the last 24h: $11,755,618
  • Price: $0.99

 

The Pax Dollar is one of the safest stablecoins on the market. It was presented to the market in 2018 by Paxos. The security behind this stablecoin is the charter granted to Paxos in 2015 – the New York State Department of Financial Services Trust Charter for Digital Assets.

USDP has a 1:1 ratio to the US dollar and is 100% backed by this reserve. Paxos uses the ERC-20 blockchain, i.e. the Ethereum blockchain, allowing 15 transactions per second.

It has high liquidity, and although it is available on all top crypto exchanges, its volume is not up to par with other top stablecoins. Currently, it has a market cap of almost a billion.

StraitsX Singapore Dollar (XSGD)

Type of Holding Percentage
Cash 100%
  • Market Capitalisation: $183 million
  • Circulating Supply: 251 million XSGD
  • Volume in the last 24h: $1 million
  • Price: S$1

 

If investing in Singapore is something you’re specifically looking to do, then this is the winner for you. XSGD is entirely based on the Singaporean dollar, with a 1:1 ratio. 2 open-source blockchains power it:

 

Don’t be discouraged thinking that this stablecoin is worth less than the rest on this list.

On the contrary, this stablecoin comes with the most significant safety arsenal. It is issued by Xfers, which is regulated by the Monetary Authority of Singapore (MAS) under the e-money framework and takes recommendations by the Financial Action Task Force.

The stablecoin has a valid license from this body – a major payment institution license; plus, it is audited by Quantstamp and is in accordance with Notice PSN01, which fights money laundering and financial terrorism online.

The best part is that it has a long list of well-known partners – Zipmex, Coinhako, Crypto.com, and more. This way, you have the chance to choose various custodial or non-custodial wallet options and more.

XSGD is the first Travel Rule compliant stablecoin in the whole world. It gives its users all benefits that cryptos have – fast payments, low fees, and knowing that their funds are safe and controlled by a valid legal body.

Furthermore, the assets backing up XSGD are kept in a Singaporean bank where they are safe from any misappropriation. Don’t worry, all assets are always redeemable in the StraitsX platform.

As for the current market value, XSGD is relatively new, but it’s not one that you don’t dismiss right away.

Volume has been steadily growing and has now reached around 18%, proving that there is interest in it.

Currently, it works with around 251,321,142 XSGD as a circulating supply but has approximately 264 million in total supply.

Moreover, going through the historical data of this stablecoin, you can see that its value has never strayed away from S$1, which for stablecoins is a significant factor determining their existence.

This stablecoin allows Singaporeans to enter the world of DeFi and make instant and fee-free transactions worldwide on the blockchain or across digital assets markets.

And the easiest way to purchase them would be on the StraitsX platform.

Conclusion

The 7 stablecoins mentioned above are the most popular cryptocurrencies used as a medium of exchange.

They are considered stable because their value doesn’t fluctuate much over time. This makes them ideal for use as a currency in online transactions.

Due to their liquidity, most crypto exchanges offer them as trading pairs, which helps make your foray into cryptocurrencies much easier.

Remember, always keep your cryptocurrencies in a crypto wallet!

I recommend you read our guide on the 7 best crypto wallets in Singapore!

Disclaimer: Each article written obtained its information from reliable sources and should be purely used for informational purposes only. The information provided by Dollar Bureau and its affiliated parties is not meant to be construed as financial advice. Dollar Bureau shall not be held liable for any inaccuracies, mistakes, omissions, and losses incurred should you act upon any information listed on this website. We recommend readers to seek financial planning advice from qualified financial advisors. 

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