Main Stablecoins
In this module, we will be discussing some of the most popular stablecoins in the market and their unique characteristics.
Tether is one of the first stablecoins in the market, established in 2014 by Tether Limited. It is pegged to the US dollar at a 1:1 ratio and operates on the Omni Layer Protocol, a platform built on top of the Bitcoin blockchain. The main objective of Tether is to provide a stable means of exchange and store of value within the cryptocurrency market, which is known for its volatility.
Tether’s value is maintained by holding an equivalent amount of US dollars in reserve, and its transparency is ensured through regular audits by third-party firms. Tether has become widely accepted by cryptocurrency exchanges, making it a popular choice for traders and investors. However, concerns have been raised about Tether’s reserve management and the level of transparency around its operations, which have led some critics to question its stability.
Despite the controversy surrounding Tether, it remains a widely used stablecoin in the market, especially in regions with less developed financial infrastructure where access to traditional banking services is limited. Tether’s widespread adoption and long history in the market make it a reliable and well-established stablecoin.
USD Coin (USDC)
USD Coin (USDC) is a stablecoin created by Circle and the Centre consortium in 2018. It is pegged to the US dollar and operates on the Ethereum blockchain, allowing for faster and cheaper transactions compared to Tether. USDC is audited regularly by third-party firms to ensure its reserves are fully backed by US dollars, providing transparency and security to its users.
One of the key advantages of USDC is its integration with the DeFi ecosystem, making it a popular choice for decentralized exchanges and lending platforms. USDC is also compatible with a growing number of decentralized applications and protocols, further expanding its utility in the crypto market.
USDC’s transparent reserve management and decentralized structure make it a reliable and secure stablecoin, and its integration with the DeFi ecosystem positions it as a key player in the future of finance. Its fast and low-cost transactions and growing popularity among crypto users make it an attractive choice for both traders and investors.
Binance USD (BUSD)
Binance USD (BUSD) is a stablecoin launched by Binance in collaboration with Paxos in 2019. It is pegged to the US dollar and operates on the Ethereum blockchain. Binance USD is fully backed by US dollars held in reserve, offering stability and security to its users.
Binance USD is used for a range of applications, including trading on Binance’s cryptocurrency exchange, margin trading, and as a stable store of value in the DeFi ecosystem. Its association with Binance, one of the largest and most trusted cryptocurrency exchanges in the world, has also contributed to its popularity among crypto users.
Binance USD’s fast and secure transactions, along with its widespread acceptance by cryptocurrency exchanges, make it a reliable choice for both traders and investors. Its integration with the DeFi ecosystem and association with Binance position it as a key player in the future of finance.
Dai (DAI)
Dai is a decentralized stablecoin created by MakerDAO in 2017. Unlike traditional stablecoins, Dai operates on the Ethereum blockchain and is backed by a range of crypto assets, including ETH, rather than US dollars. Dai’s value is maintained through a system of smart contracts and decentralized market makers, making it a unique and innovative stablecoin in the market.
Dai’s decentralized nature and integration with the DeFi ecosystem make it a popular choice for decentralized exchanges and lending platforms. Its stability mechanism, which involves multiple crypto assets as collateral, makes it resistant to market volatility and more secure than other stablecoins that are backed by a single asset.
Dai’s decentralized structure, combined with its stability mechanism, make it a reliable and secure stablecoin. Its integration with the DeFi ecosystem and growing popularity among crypto users also position it as a key player in the future of finance. Additionally, Dai’s fast and low-cost transactions make it an attractive choice for both traders and investors.
True USD (TUSD)
TrueUSD (TUSD) is a stablecoin created by TrustToken in 2018. It is pegged to the US dollar and operates on the Ethereum blockchain. TUSD’s value is maintained through a reserve of US dollars held in escrow by licensed and regulated trust companies, providing transparency and security to its users.
TUSD is designed for a range of applications, including as a stable store of value, a medium of exchange, and as a collateral for loans and investments in the DeFi ecosystem. Its fast and low-cost transactions and growing popularity among crypto users also make it an attractive choice for both traders and investors.
TrueUSD’s transparent reserve management and decentralized structure make it a reliable and secure stablecoin, and its integration with the DeFi ecosystem positions it as a key player in the future of finance. Its fast and low-cost transactions and growing popularity among crypto users make it an attractive choice for both traders and investors.
Gate USD (USDG)
Gate USD (USDG) is a stablecoin launched by Gate.io in 2021. It is pegged to the US dollar and operates on the Ethereum blockchain. USDG’s value is maintained through a reserve of US dollars held in escrow, providing stability and security to its users.
USDG is used for a range of applications, including trading on Gate.io’s cryptocurrency exchange and as a stable store of value in the DeFi ecosystem. Its fast and low-cost transactions and growing popularity among crypto users make it an attractive choice for both traders and investors.
Gate USD’s transparent reserve management and decentralized structure make it a reliable and secure stablecoin, and its integration with the DeFi ecosystem positions it as a key player in the future of finance. Its fast and low-cost transactions and growing popularity among crypto users make it an attractive choice for both traders and investors.
The USDTerra (UST case)
USDTerra (UST) is a stablecoin that was launched in 2021 as a part of the Terra Network ecosystem. UST was designed to be a low-volatility stablecoin that would facilitate cross-border payments and decentralized finance (DeFi) applications. It was pegged to the US dollar and was backed by the Terra Network’s stablecoin liquidity pool.
The Terra Network ecosystem also includes a suite of decentralized finance protocols and applications, allowing users to take advantage of a wide range of financial services, from lending and borrowing to yield farming and stablecoin trading.
However, on February 22, 2022, UST experienced a flash crash that led to it depegging from the US dollar. This was due to a sudden increase in demand for UST in the DeFi ecosystem, which depleted the Terra Network’s liquidity pool and caused UST’s value to drop. Despite the Terra Network’s efforts to stabilize the value of UST, it was unable to fully recover and UST remains depegged from the US dollar to this day.
The USTerra incident highlights the importance of having a robust and reliable stablecoin infrastructure, as well as the importance of maintaining adequate reserves to meet the demands of the market. Nevertheless, UST’s fast and low-cost transactions and its integration with the DeFi ecosystem make it an important player in the future of decentralized finance. The Terra Network continues to work towards restoring UST’s stability, and its lessons learned will help inform the development of future stablecoins and DeFi protocols.
Other stablecoins
There are many other stablecoins in the market, each with its unique characteristics and uses. Some other notable stablecoins include USDD, Paxos Standard (PAX) and Gemini Dollar (GUSD).
The Stablecoin Landscape in 2022
The year 2022 has proven to be quite eventful for stablecoin assets as the total market capitalization of the stablecoin economy has seen a significant decline.
Since January 2022, the market valuation of stablecoins has continued to plummet, resulting in a loss of $28.08 billion in US dollar value from the stablecoin economy. Data shows that the stablecoin market was valued at $167.08 billion on January 5, 2022. However, it was valued at $139.06 billion in December, representing a 16.77% decrease from the start of the year.
This drop in value marks the lowest point of the stablecoin economy in US dollar value since October 23, 2021. Tether (USDT), which had a market capitalization of around $77.14 billion in January 2022, ended the year down to $66.25 billion.
Several dollar-pegged stablecoins, including Magic Internet Money, Liquity USD, Fei USD, and Neutrino USD, have also seen a decline in their market position. Neutrino USD (USDN), which was once considered a stablecoin, eventually traded at $0.448 per unit after depegging from the $1 parity on November 7, 2022.
Another stablecoin, HUSD, which depegged from the $1 parity on October, 2022, has also lost its peg. A single HUSD token eventually traded at $0.14 per unit. Similarly, Flex USD (FLEXUSD) lost its dollar peg in June 2022 and eventually traded at $0.25 per unit.
In December 2022, stablecoins accounted for $60.74 billion out of the $107.29 billion in 24-hour trade volume, representing 56.61% of all trades. However, by the end of the year, the global trade volume has decreased to $37 billion, with stablecoins accounting for $29.92 billion or roughly 80.86% of all trades.
Relevant Articles
Highlights:
- Tether (USDT): stablecoin pegged to the US dollar (1:1 ratio) and one of the first stablecoins, aimed to provide a stable means of exchange and store of value in the volatile cryptocurrency market. It is widely accepted but concerns have been raised about its reserve management and transparency around operations.
- USD Coin (USDC): stablecoin created by Circle and the Centre consortium pegged to the US dollar, operating on the Ethereum blockchain. Its transparent reserve management and decentralized structure make it a reliable and secure stablecoin. It is also integrated with the DeFi ecosystem, making it a popular choice for decentralized exchanges and lending platforms.
- Binance USD (BUSD): stablecoin launched by Binance in collaboration with Paxos, pegged to the US dollar, and operating on the Ethereum blockchain. Binance USD is fully backed by US dollars held in reserve and is used for trading on Binance’s cryptocurrency exchange, margin trading, and as a stable store of value in the DeFi ecosystem.
- Dai (DAI): decentralized stablecoin created by MakerDAO and pegged to the US dollar. Dai operates on the Ethereum blockchain and is backed by a range of crypto assets, including ETH. Its stability mechanism involves multiple crypto assets as collateral, making it resistant to market volatility and more secure than other stablecoins. It is a popular choice for decentralized exchanges and lending platforms.
- True USD (TUSD): stablecoin created by TrustToken and pegged to the US dollar. TUSD operates on the Ethereum blockchain and is designed for a range of applications, including as a stable store of value, a medium of exchange, and as collateral for loans and investments in the DeFi ecosystem. Its transparent reserve management and decentralized structure make it a reliable and secure stablecoin.
- Gate USD (USDG): stablecoin launched by Gate.io, pegged to the US dollar, and operating on the Ethereum blockchain. It is used for trading on Gate.io’s cryptocurrency exchange and as a stable store of value. Its value is maintained through a reserve of US dollars held in escrow, providing stability and security to its users.
Урок 1:Introduction
Урок 2:Types of Stablecoins and How Do They Work
Урок 3:Main Stablecoins
Урок 4:Stablecoin Use Cases and Applications
Урок 5:Stablecoin Regulations and Compliance
Урок 6:Evaluating and Investing in Stablecoins
Урок 7:The Future of Stablecoins
Main Stablecoins
In this module, we will be discussing some of the most popular stablecoins in the market and their unique characteristics.
Tether is one of the first stablecoins in the market, established in 2014 by Tether Limited. It is pegged to the US dollar at a 1:1 ratio and operates on the Omni Layer Protocol, a platform built on top of the Bitcoin blockchain. The main objective of Tether is to provide a stable means of exchange and store of value within the cryptocurrency market, which is known for its volatility.
Tether’s value is maintained by holding an equivalent amount of US dollars in reserve, and its transparency is ensured through regular audits by third-party firms. Tether has become widely accepted by cryptocurrency exchanges, making it a popular choice for traders and investors. However, concerns have been raised about Tether’s reserve management and the level of transparency around its operations, which have led some critics to question its stability.
Despite the controversy surrounding Tether, it remains a widely used stablecoin in the market, especially in regions with less developed financial infrastructure where access to traditional banking services is limited. Tether’s widespread adoption and long history in the market make it a reliable and well-established stablecoin.
USD Coin (USDC)
USD Coin (USDC) is a stablecoin created by Circle and the Centre consortium in 2018. It is pegged to the US dollar and operates on the Ethereum blockchain, allowing for faster and cheaper transactions compared to Tether. USDC is audited regularly by third-party firms to ensure its reserves are fully backed by US dollars, providing transparency and security to its users.
One of the key advantages of USDC is its integration with the DeFi ecosystem, making it a popular choice for decentralized exchanges and lending platforms. USDC is also compatible with a growing number of decentralized applications and protocols, further expanding its utility in the crypto market.
USDC’s transparent reserve management and decentralized structure make it a reliable and secure stablecoin, and its integration with the DeFi ecosystem positions it as a key player in the future of finance. Its fast and low-cost transactions and growing popularity among crypto users make it an attractive choice for both traders and investors.
Binance USD (BUSD)
Binance USD (BUSD) is a stablecoin launched by Binance in collaboration with Paxos in 2019. It is pegged to the US dollar and operates on the Ethereum blockchain. Binance USD is fully backed by US dollars held in reserve, offering stability and security to its users.
Binance USD is used for a range of applications, including trading on Binance’s cryptocurrency exchange, margin trading, and as a stable store of value in the DeFi ecosystem. Its association with Binance, one of the largest and most trusted cryptocurrency exchanges in the world, has also contributed to its popularity among crypto users.
Binance USD’s fast and secure transactions, along with its widespread acceptance by cryptocurrency exchanges, make it a reliable choice for both traders and investors. Its integration with the DeFi ecosystem and association with Binance position it as a key player in the future of finance.
Dai (DAI)
Dai is a decentralized stablecoin created by MakerDAO in 2017. Unlike traditional stablecoins, Dai operates on the Ethereum blockchain and is backed by a range of crypto assets, including ETH, rather than US dollars. Dai’s value is maintained through a system of smart contracts and decentralized market makers, making it a unique and innovative stablecoin in the market.
Dai’s decentralized nature and integration with the DeFi ecosystem make it a popular choice for decentralized exchanges and lending platforms. Its stability mechanism, which involves multiple crypto assets as collateral, makes it resistant to market volatility and more secure than other stablecoins that are backed by a single asset.
Dai’s decentralized structure, combined with its stability mechanism, make it a reliable and secure stablecoin. Its integration with the DeFi ecosystem and growing popularity among crypto users also position it as a key player in the future of finance. Additionally, Dai’s fast and low-cost transactions make it an attractive choice for both traders and investors.
True USD (TUSD)
TrueUSD (TUSD) is a stablecoin created by TrustToken in 2018. It is pegged to the US dollar and operates on the Ethereum blockchain. TUSD’s value is maintained through a reserve of US dollars held in escrow by licensed and regulated trust companies, providing transparency and security to its users.
TUSD is designed for a range of applications, including as a stable store of value, a medium of exchange, and as a collateral for loans and investments in the DeFi ecosystem. Its fast and low-cost transactions and growing popularity among crypto users also make it an attractive choice for both traders and investors.
TrueUSD’s transparent reserve management and decentralized structure make it a reliable and secure stablecoin, and its integration with the DeFi ecosystem positions it as a key player in the future of finance. Its fast and low-cost transactions and growing popularity among crypto users make it an attractive choice for both traders and investors.
Gate USD (USDG)
Gate USD (USDG) is a stablecoin launched by Gate.io in 2021. It is pegged to the US dollar and operates on the Ethereum blockchain. USDG’s value is maintained through a reserve of US dollars held in escrow, providing stability and security to its users.
USDG is used for a range of applications, including trading on Gate.io’s cryptocurrency exchange and as a stable store of value in the DeFi ecosystem. Its fast and low-cost transactions and growing popularity among crypto users make it an attractive choice for both traders and investors.
Gate USD’s transparent reserve management and decentralized structure make it a reliable and secure stablecoin, and its integration with the DeFi ecosystem positions it as a key player in the future of finance. Its fast and low-cost transactions and growing popularity among crypto users make it an attractive choice for both traders and investors.
The USDTerra (UST case)
USDTerra (UST) is a stablecoin that was launched in 2021 as a part of the Terra Network ecosystem. UST was designed to be a low-volatility stablecoin that would facilitate cross-border payments and decentralized finance (DeFi) applications. It was pegged to the US dollar and was backed by the Terra Network’s stablecoin liquidity pool.
The Terra Network ecosystem also includes a suite of decentralized finance protocols and applications, allowing users to take advantage of a wide range of financial services, from lending and borrowing to yield farming and stablecoin trading.
However, on February 22, 2022, UST experienced a flash crash that led to it depegging from the US dollar. This was due to a sudden increase in demand for UST in the DeFi ecosystem, which depleted the Terra Network’s liquidity pool and caused UST’s value to drop. Despite the Terra Network’s efforts to stabilize the value of UST, it was unable to fully recover and UST remains depegged from the US dollar to this day.
The USTerra incident highlights the importance of having a robust and reliable stablecoin infrastructure, as well as the importance of maintaining adequate reserves to meet the demands of the market. Nevertheless, UST’s fast and low-cost transactions and its integration with the DeFi ecosystem make it an important player in the future of decentralized finance. The Terra Network continues to work towards restoring UST’s stability, and its lessons learned will help inform the development of future stablecoins and DeFi protocols.
Other stablecoins
There are many other stablecoins in the market, each with its unique characteristics and uses. Some other notable stablecoins include USDD, Paxos Standard (PAX) and Gemini Dollar (GUSD).
The Stablecoin Landscape in 2022
The year 2022 has proven to be quite eventful for stablecoin assets as the total market capitalization of the stablecoin economy has seen a significant decline.
Since January 2022, the market valuation of stablecoins has continued to plummet, resulting in a loss of $28.08 billion in US dollar value from the stablecoin economy. Data shows that the stablecoin market was valued at $167.08 billion on January 5, 2022. However, it was valued at $139.06 billion in December, representing a 16.77% decrease from the start of the year.
This drop in value marks the lowest point of the stablecoin economy in US dollar value since October 23, 2021. Tether (USDT), which had a market capitalization of around $77.14 billion in January 2022, ended the year down to $66.25 billion.
Several dollar-pegged stablecoins, including Magic Internet Money, Liquity USD, Fei USD, and Neutrino USD, have also seen a decline in their market position. Neutrino USD (USDN), which was once considered a stablecoin, eventually traded at $0.448 per unit after depegging from the $1 parity on November 7, 2022.
Another stablecoin, HUSD, which depegged from the $1 parity on October, 2022, has also lost its peg. A single HUSD token eventually traded at $0.14 per unit. Similarly, Flex USD (FLEXUSD) lost its dollar peg in June 2022 and eventually traded at $0.25 per unit.
In December 2022, stablecoins accounted for $60.74 billion out of the $107.29 billion in 24-hour trade volume, representing 56.61% of all trades. However, by the end of the year, the global trade volume has decreased to $37 billion, with stablecoins accounting for $29.92 billion or roughly 80.86% of all trades.
Relevant Articles
Highlights:
- Tether (USDT): stablecoin pegged to the US dollar (1:1 ratio) and one of the first stablecoins, aimed to provide a stable means of exchange and store of value in the volatile cryptocurrency market. It is widely accepted but concerns have been raised about its reserve management and transparency around operations.
- USD Coin (USDC): stablecoin created by Circle and the Centre consortium pegged to the US dollar, operating on the Ethereum blockchain. Its transparent reserve management and decentralized structure make it a reliable and secure stablecoin. It is also integrated with the DeFi ecosystem, making it a popular choice for decentralized exchanges and lending platforms.
- Binance USD (BUSD): stablecoin launched by Binance in collaboration with Paxos, pegged to the US dollar, and operating on the Ethereum blockchain. Binance USD is fully backed by US dollars held in reserve and is used for trading on Binance’s cryptocurrency exchange, margin trading, and as a stable store of value in the DeFi ecosystem.
- Dai (DAI): decentralized stablecoin created by MakerDAO and pegged to the US dollar. Dai operates on the Ethereum blockchain and is backed by a range of crypto assets, including ETH. Its stability mechanism involves multiple crypto assets as collateral, making it resistant to market volatility and more secure than other stablecoins. It is a popular choice for decentralized exchanges and lending platforms.
- True USD (TUSD): stablecoin created by TrustToken and pegged to the US dollar. TUSD operates on the Ethereum blockchain and is designed for a range of applications, including as a stable store of value, a medium of exchange, and as collateral for loans and investments in the DeFi ecosystem. Its transparent reserve management and decentralized structure make it a reliable and secure stablecoin.
- Gate USD (USDG): stablecoin launched by Gate.io, pegged to the US dollar, and operating on the Ethereum blockchain. It is used for trading on Gate.io’s cryptocurrency exchange and as a stable store of value. Its value is maintained through a reserve of US dollars held in escrow, providing stability and security to its users.