The concept of stablecoins can be seen as critical infrastructure within the crypto space. Stablecoins such as Tether or USD Coin are often used as an intermediary store of value and thus helped the crypto market to grow since market participants do not have to offramp their money if they want to store it without any risk of volatility. In fact, stablecoins are rooted so deeply into the system, that a lot of politicians see them as a threat to their nation's currency.
The crypto market is opened 24 hours a day, seven days a week and therefore there are investment opportunities every time of the day. That is why stablecoins emerged. One can easily store their money on a wallet without having the risk of constant volatility but still be ready for every dip that is worth to buy.
Stablecoins are an easy way to move money in and out between crypto exchanges without waiting for extra banking procedures.
Every investor should be aware if and how the supply is backed to make a safe investment.
The top 5 Stablecoins
Tether is 2014 launched stablecoin which is pegged to the U.S. dollar. Tether is regularly pressured regarding its reserves since only 10% of it is held in cash or deposit form. Most of Tether's supply is backed by short term debt issued by companies to raise funds.
supply: ~ 80 billion
USD Coin ($USDC)
USDC supply is backed by dollar its U.S. dollar reserves. They also claim to have achieved regulatory compliance. The USD Coin is accepted by most large exchanges.
supply: ~ 53.5 billion
Binance USD ($BUSD)
BUSD was created in 2019 with its supply limited to its U.S. dollar reserves. The reserves of the Binance USD gets audited once a month and the founding member is no other than Binance - the worlds biggest crypto exchange. That allows Binance users to use exchange services without any fees.
supply: ~ 18.3 billion
The concept behind the TerraUSD stablecoin is quite interesting. The 2020 launched stablecoin maintains its peg of one UST per U.S. dollar with the help of the supply being algorithmically changed. The change is based on Terra's token's price and supply, to cause an equilibrium that will keep its value.
supply: ~ 13 billion
The supply of Dai is limited by the collateral stored in its vaults. Important to know is that the collateral is not in U.S. Dollars but in other cryptocurrencies. Dai is mostly used to interact with DeFi protocol services but can also be used for trades. Dai is governed by MakerDAO. Dai tokens can be minted by any user and thus is considered as decentralized.
supply: ~ 9.2 billion
How do you buy Stablecoins?
If you do not want to use a centralized exchange you can use a decentralized exchange.