Stablecoins have been hot news for quite long and are still on the rise. The stability, that many of stablecoins have been providing, is the key characteristic that has attracted the attention of crypto investors. Many stablecoins have cashed their signature feature to pave their way to success. Some of the stablecoins have achieved true success while there are many who had to wind everything up after seeing nothing but failure.
Stablecoins are pegged to stable assets such as fiat currency, cryptocurrency or gold. Most of them are pegged to USD.
Stablecoins that are related to USD
Basis has deployed algorithmic central banks to maintain its value. It uses protocol that expands and contracts supply of stablecoins according to the demand. It aims to serve as medium of exchange for online users.
Carbon is an another stablecoin that correlates to USD and uses algorithmic adjustable supply of coin according to its demand. Carbon provides remarkable speed all over the world and smart contracts to its user.
Dai is another stablecoin that is stabilized against the value of USD. Dai’s value stability is directly supported by makers through liquidating CDPs when the underlying collateral falls to far low. It is regarded as ‘the next step in money revolution’ by MakerDao.
Stably provides its users with the stability of US Dollars and flexibility of the Ethereum and Stellar protocols. It will be stretching out to more blockchains in future. At the moment, Stably eases its usage with provision of platform with zero charges for StableUSD issuance and redemption.
Trueusd is another stablecoin that is backed by USD and built on TrustToken platform. It can be exchanged with USD directly with an escrow account. Besides direct banking, Trueusd provides transparency and bank grade security to its users.
Tether, backed by USD, is the biggest and most successful stablecoin of all time. Popular exchanges such as Bitfinex, Shapeshift, GoCoin and many others operating Tether at the moment. Tether is considered as determining factor for Bitcoin’s price fluctuations. This shows its influence in the crypto world.
There are several reasons for trend disclosed. USD is chose by many stablecoins as the asset to be pegged to. Colton Robtoy, Chief Investment Officer of i94 Capital, a cryptocurrency Hedge fund, told Blockpublisher the reason behind this very common practice by most stablecoins. He said:
(It)Is easier to think in terms of USD for pricing.
But he also suggested that for the long run, substitutes should be found. He told that alternatives are must for survival of stablecoins in the future. He responded to the question of finding new alternatives by addressing stablecoins by saying:
If they don’t want to be used in the short-term, sure.
Stablecoins are seen pegged to USD due to the ease provided by USD. But, stablecoins need to look into alternatives to continue their success in long run.