As DeFi continues to expand, so has the adoption and availability of stablecoin.
Stablecoins are often useful for bridging the difference between fiat currencies and digital assets via their 1-to-1 pegging of traditional fiat currencies.
Although Tether (USDT) still holds the lion’s share of the market for stablecoin, many other stablecoins have seen growth in 2020.
Tether was developed to encourage investors to store value on a dollar-pegged cryptocurrency for trading. Tether’s website alleges that each Tether is backed 1-to-1 with USD existing in a bank.
This means that there is an equal $1 in the reserve of the organization for each USDT coin.
Tether is currently the most common stable coin, according to Coinmarketcap, with a market capitalization of over $15 billion and a regular trading volume of over $40 billion.
There have been many questions about whether or not Tether tokens are 100% backed by liquid assets, with various inquiries having been made about Tether since its inception.
But aside from the debate, the numberof USDT in circulation has recently risen from just over $4 billion in circulation at the beginning of 2020 to a much larger $15 billion due to the rise of DeFi
Binance USD (BUSD), introduced by a collaboration with one of the main crypto exchanges and Paxos, is a secure coin connected to the US dollar.
Binance USD has gained certification from the Financial Services Department of the State of New York. Binance USD focuses on positioning itself as the key stablecoin asset for the DeFi ecosystem.
It is focused on helping developers who want to make stablecoin-powered DeFi apps through its collaboration with Dapper Laboratories, the team that pioneered crypto games such as Crypto Kitties.
BUSD is specifically very popular on BSC, Binance Smart Chain.
Due to Binance’s market domination of the centralized exchange industry, the market cap of BUSD rose from $20 million at the beginning of the year to over $500 million at its current mark.
TrueUSD is considered by some to be the most decentralized option for stablecoins.
TrueUSD is a USD-pegged stablecoin that promises
to operate on a straightforward ethical code that provides real-time confirmation to the public of funds deposited in an escrowed bank account.
The TrueUSD team does not have access to the escrow account that backs TrueUSD. Smart contracts, instead of a human management team, help preserve the peg at 1:1 between the U.S. dollar and the TUSD coin.
USD Coin (USDC)
Released by Circle, a supplier of blockchain-centered financial services, USD Coin was introduced in 2018 as a 1:1 ratio stablecoin linked to the U.S. dollar.
Circle reports on its website that USDC balances are audited on a monthly basis and released by top accounting firms to the public.
Like Tether, USDC has seen rapid growth, with circulation in the past six months growing over $1.8 billion.
USDC has recently launched a wrapped version on the Ethereum blockchain to allow trading on Ethereum-based DEXes.