Stable Stable coin: Most Popular Projects
Stablecoin is a type of cryptocurrency that always holds a stable price , just as the name implies. To stabilise the unstable crypto market situation and to ensure a stable ground for all. These type of cryptocurrencies was created to do this purpose.
Stablecoin projects are many so far but not all of them are popularly, though some are worth mentioning.
Some of these projects are
Fiat-Backed Stablecoin Projects:
1.Tether (USDT) united states dollar tether
Tether is one of the most sort after stablecoin in the market backed up by the USD(US Dollars) .Its most popular among Blockchain faithful. Tether Limited is the company that owns Tether, though they are into other things like Bitfinex which is one of the largest exchange is also linked to Tether stablecoin and as such has the same head incharge of them.
This stablecoin price is mainly used by crypto investors, whenever they need to avoid a possible downfall of the market. Tether is mostly preferred by investor as a means to checkmate their investment. For a more valuable and stable investment.
What Tether does here is to reduce loss in crises situation through sudden cash out by providing a better solution to direct USD conversion. Here, traders can convert all their investments into a stablecoin that represents an equivalent amount of USD. By so doing , cashing out in crisis will not exist again.
Disagreements Regarding Tether
Even though Tether might seem like the perfect catch, still it has some controversies ranging from issue of lack of transparency in the network to the problem of centralised structure. there are some controversies in the market. These are inevitable questions as Fiat- backed stablecoin is centralised.
Secondly, there are doubts that Tether Stablecoin can back up all the tokens with the exact amount of fiat money.
Though Tether claim that they are capable, that there is enough Dollars to convert the tokens. A lot of critics challenged Tether’s claims though they couldn’t really give enough proof.
That not withstanding Tether is still popular with more than $2 billion market capital.
2. TrueUSD (TUSD)
TrueUSD is an alternative to Tether and also another fiat-backed stable coin
With this type of Fiat- backed stablecoin, u experience transparency which is their core framework. This is unlike Tether.
Their system has some fluent significance with the escrow system. With that escrow account, every user or participation in their platform can exchange TUSD( Tether USD) with USD using that escrow account.
The account can not be manipulated and of course its untouchable . Infact this method ensures user friendly. This account is untouchable for the team, and no one can manipulate it. Obviously, this scenario will ensure a better user experience as you will always be able to get 1:1 , that is equal ration for your token.
Bitfinex was the first to introduce TrueUSD and later other big crypto marketplace such as CoinTiger, Binance and Upbit accepted it. As far as the popularity goes, it’s on the second position, tight after Tether. However, the team is still working on the trying to adaptation of this new stablecoin to other sectors such as international payment or e-commerce solution.
3. Gemini (GUSD)
The Winkle Voss twins – Cameron and Tyler are behind this new type of fiat-backed stablecoin called Gemini dollar which arrived the market with very high expectations.
Gemini dollar was also backed up by US dollar with all the regulations typical or synonymous with Fiat money.
The company claims that they are presently the first regulated coin in the market with notable features like the ability to send and receive US dollars on their platform.
Therefore, it ensures fast and secured payment system that works in line with US dollars.
How Does It Work?
It involves conversion and exchange process. At first, anyone interested in buying Gemini will have to convert USD to GUSD from the Gemini exchange. These tokens moves straight to his/her Ethereum account. It can also be converted back to USD if the user deposits same amount to their Gemini dollar account as well.
These tokens issued by U.S dollars are saved in the USA bank where they will be eligible for transfer purposes and other applications. To ensure full transparency, the company liaise with external independent accounting firm who inspects the 1:1 ratio monthly to maintain equal value.
By this process, you have more confidence about your Gemini dollar and your investment is assured.
Commodity-Backed Stablecoin Projects:
1.Digix Gold Tokens (DGX)
Digix Gold is one of the best stablecoins projects for a commodity-backed coin .This ERC-20 token is backed by a popular demanding commodity called – Gold. Digix brings good opportunity close to many users longing to invest in Gold.
Every single gold is audited and then stored in an extremely guarded vault known as “The Safe House.” DGX is redeemable any time you like and there are no restrictions whatsoever.
The value of every token depends on the market price of Gold. Gold always has good value and its considered a stable asset as regards investment along with Fiat money.
If you wish to invest in Gold, You will get 1 gram of gold for each DGX token, on this network.
If you are worried about transparency, then DGX can definitely get rid of your worries. Every 3-months DGX provides a fully audited statement that ensures the safety of your asset and for transparency. With this investor’s worries are over.
Tiberius Group AG. Started their journey of blockchain with the introduction and launch of Tiberius Coin . Tiberius Group AG is an asset management and commodity trading firm that will give investors another option to buy stablecoin.
Tiberius coin is someway a unique new stablecoin cryptocurrency backed up by rare metals. They are relatively new anyway. It was launched on 1st of October,2018.
This stable coin crypto is backed with a combination of rare metals, as one of this coin will represent seven types of metals. So, its not backed by a single rare metal. They have a precise ratio of metal for every coin. The token mostly has 6.569% platinum, 11.057% cobalt, 19.595% gold, 13.269% nickel, 15.838% tin, 8.713% aluminium and 24.959% copper.
For their weight, you’ll get 0.0015g platinum, 1g cobalt, 0.003g gold, 6g nickel, 5g tin, 25g aluminium and 25g copper.
According to them, they want people to invest in industrial metals which will be good for them because of high demand and which will persist for a very long time.
Unlike stablecoin, Tiberius coin is sold legally under the jurisdiction of the Swiss law. This stablecoin will only cost you $0.70, and it will always be at that price range.
Cryptocurrency-Backed Stablecoin Projects:
Though with a little difference, MakerDAO falls under the cryptocurrency-backed best stablecoins. As mentioned earlier that, cryptocurrencies are highly volatile and this type should always have a mix of crypto to stable each other.
However, that’s not the case in MakerDAO as they have two types of token one is MKR, and another is DAI stablecoin. The DAI stablecoin is backed by only Ethereum. Now the issue is how to maintain the stability.
As we all know, this type of coin sometimes over-collateralizes, it may demand more exchange for the worth. Therefore, if you want a $30 worth of stable coin in the network, you would have to peg $60 worth of Ethereum for them. Once the Ethereum is pegged, the network will use a smart contract and start minting the DAI gold stablecoin and sends it to your wallet.
Cryptocurrencies works in decetralized process. So, the essential part about this coin is that you’ll get a fully decentralized system as DAI stablecoin doesn’t work with any kind of centralizing unit or third party.
Havven is a decentralized payment system previously referred to as Synthetix. Havven started its journey pegged to offer the same value as the USD with the launch of a stable coin named nUSD (now sUSD).
The primary goal which is the main purpose of Havven stable coin is to provide a better solution for cryptocurrencies price fluctuations and offer a decentralized path.
Now the issue of “ how do you mint the coin”? . Well, for this you’ll have to buy their token knows as SNX , Previously HAV. Their very own token backs up this other token, thereby making sure that the supply always remains stable.
Synthetix introduced many more stablecoins such as sEUR, sJPY, sAUD, sKRW, and sXAU backed by SNX after their rebranding . Therefore fir you to have them you will need to use SNX coins and your choice of the sblecoin will be minted.
It the means that with Synthetix, you get a lot of choices and many currencies, this is quite interesting. As mostly stablecoins are pegged to USD, Here you get other currencies as well including gold stablecoin since most stablecoins are pegged to USD.
Seignorage-Style/Non-collateralized Stablecoin Projects:
Cabon another best stablecoins and an example of non-collateralized stablecoin. Carbon stablecoin aims towards the future of distributed ledger technology, and with hope that stablecoins will be the next asset for the global economy.
Carbon stablecoin follows the stable value of USD, by using algorithms to stabilize the overall token supply.
They have two types of tokens on the network – Carbon Stablecoin and Carbon Credits. The Cabon credits are used to maintain the price of carbon stablecoin or CUSD and its a volatile token.
Immediately the prices start to drop ,the algorithms auctions off their carbon credit to users who want to take part in burning their CUSD. After they have had enough CUSD, the algorithm burns them off, which creates an upward price pressure.
If along the line, the price starts to rise then the network distributes CUSD to the carbon credit holders and stabilizes the supply again. In this process you get a decentralized nature without anything backing it up or being backed up by other collateral .
By this way, it then means that Carbon is using a volatile asset to stabilize another asset. They believe it can go on for a very long time without affecting the network in any way and this algorithm is very simple.
Kowala is a non- collateralized Stablecoin and also one of the best stablecoins to invest in for those who are into this type of cryptocurrencies.
kUSD as the short form implies, is the official coin of Kowala, and it follows the pricing of USD. kUSD runs on Kowala protocol and claims to be the first automatically backed up stable coin.
The Kowala protocol creates and destroys kUSD and if it experiences high demands, it then creates more kUSD but if there is a drop, then it destroys the token. This protocol has the same outcome as Basis.
With this method of Kowala, you will be able to undertake numerous activities like – online shopping, hospital bills , other bills and much more. Kowala may become a daily usable stablecoin if the pace is maintained.
Lets see the Real World Application
Stablecoin comes with their fair share of applications which also works well in real life scenarios
1. Everyday Currency
Stablecoins can be used as an ordinary currency just like fiat money with legal backups. You can use them to make online payments just like digital money. Finally one may be able to use only their mobile and pay for a product anytime with a cryptocurrency.
Now you don’t have to go through the hassles of conversion process before making overseas payment .
2. P2P Payments and Streamlining recurring
Making peer to peer payments is easier with stablecoins. With smart contracts you can make automated payments. Coupled with the fact that with smart contracts anything can be done. By just using smart contracts, the CEO of a company can pay his or her workers with cryptocurrency
With this coin, you will be able to pay up the same amount as they earn and all will be automated without any need for the banks. Its more convenient for both parties and faster too.
3.Affordable and Extremely Fast in Remittance.
Sending money overseas is much fast and simpler with these coins. A lot of people from developing countries of the world move to another country in search of job or to establish other businesses which is relatively normal.
With their families to support back at home, and for that, arises the need to send remittances overseas. These coins proffer fast ways and without the need of other agencies. The transaction cost are also much lower and more money will be saved using this method.
4. More Security in Case of Currency Crash.
Since they are stable, you won’t have to worry about currency crashes while investing and if there is, users can quickly exchange their money for a stablecoin to preserve the value. Unlike other cryptocurrencies, the values almost don’t have any fluctuation.
Then when everything has come to normal, they can easily get their money back without any stress. This process can help to stabilize regular fiat money as well as protection from any kind of currency crashes.
Cryptocurrency exchanges have a lot of instability to deal with . Since regular cryptos usually have limited supply, the demand for them slowly increases making them highly volatile. This is making a negative impact on the minds of investors and its affect their confidence in crypto.
Crypto marketplace also has to deal with restrictions and regulations that comes with fiat money conversion. But with stablecoin, things has changed .In stabilizing the market these coins can improve the overall cryptocurrency exchanges as no added risk or unnecessary regulations is experienced.
Why Is The Popularity of Stable Coin Increasing?
Obviously stablecoins are becoming users popular choice. Stablecoin is not like other cryptocurrencies. It works quite differently. Usually cryptocurrencies have fixed or limited supply with schedules to release new coins at a point in time but for Stablecoin, instead of having a limited supply, supplies are regulated based on market circumstances.
Therefore , they have the capability to stabilize the market and with this distributing structure for Cryptocurrency economy. For startups and rainy-day investors, its an opening of another type of opportunity despite that one may think why increase in demand but no profit for investors as prices are stable.
To have a back for rainy days or in terms of needs, stablecoin will usually give you back the same amount you invested initially and no worries on the price drop at all.
Another significant fact is that, soon all currencies will eventually be digitalized ,as we are moving forward a digital world. In that case, having stable coin as the main payment source would work similarly as we use fiat money as well.
And this is why stablecoins are the latest popular crypto in the market and the popularity keeps increasing.
Are There Limitations
Despite that fact that Stablecoins do look great as a system, but every system comes with their fair share of flaws. This brings us to the limitation of these stablecoins.
Stablecoins have a centralized nature, this pattern which goes against the primary nature of blockchain. This works perfectly with the fiat-backed ones. The architecture of Fiat-backed coins is widely centralized because it has to work always with a single entity or a third party.
That’s why the architecture becomes highly centralized.
Tether is a fiat-backed stable coin, though it uses Blockchain but it’s processes negates the primary aim of blockchain technology and you can not get the same level of experience. It can’t provide the actual decentralization of blockchain.
With centralized nature comes with the problem of trust. people can’t fully trust the system as they still need to prove their applications. Fiat-backed or commodity-backed coins have this type of limitations. They claims by these coins that they have enough money or commodity to back up the tokens, but how will the users really know about that is the issue.
In Most of the cases, users are not sure whether they are being deceived or not. Regular audits can solve these problems but not all the single stablecoin is willing or ready for it.
Another fact is that, if you want to get the real commodity someday, it could mean an expensive trip to the vault or other paperwork you don’t want to do because of its cost and other inconveniences.
Another limitation of typical fiat-backed currencies is its restrictions and regulations. This stable coin uses real money to back up, therefore most of the coins have the same regulations as the fiat money.
So, this ultimately clashes with the purpose of cryptocurrencies whose main purpose is for ease and fast transactions without restrictions and regulations.
With the law in the included, you will definitely face the same level of rules as you do with fiat money. This discourages many investors to buy stablecoin.
Crashes in price for Crypto-backed or commodity-backed stablecoins could make them unstable. Though still unclear how they will back up if the values of assets drop in the real world. The are still underestimating the real life situations despite many advantages existing. Under adverse conditions , there is no way to see how they will manage the coins to be Stable as commodity prices drops or as cryptocurrencies becomes too unstable.
The knowledge of cryptocurrencies are there for a long time but they are still coming up gradually. This goes for stable coin as well. These coins are fairly new to the crypto world and still have a lot of flaws to fix and challenges too.
However, they have great future prospects and they do look a lot promising as they could change the usual scenario of the crypto world. Every form of the stable coin has different setting and designs and none are perfect and as such if may be they are able to pull off this new type of architecture in the long run, people will start to accept the blockchain and cryptocurrencies more positively.
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