Here at Token Metrics, we understand that our most valuable asset is you, our audience.
With your help, we have put together a guide to the Top 3 Stablecoins of 2021, as voted upon by you.
So sit back, relax, and enjoy the Moon Awards.
What Are Stablecoins?
With the rise of cryptocurrencies such as Bitcoin, crypto has become widely recognized as the future currency as more people become disenfranchised with fiat money. Many investors looking for a more stable asset can be turned off by Cryptocurrencies such as Bitcoin and Ethereum as they are known to fluctuate in price and be quite volatile.
Stablecoins are the perfect compromise for those investors as they are a type of cryptocurrency that is immune to the high volatility found in Bitcoin and Ethereum. The values of stablecoins are pegged to real-world assets such as the US dollar, gold, or oil, which allows them to experience the benefits of cryptocurrency without the high volatility.
Stablecoins are assets that fit seamlessly into the financial plans of an investor who sees the value in cryptocurrency but wants the stability found in real-world assets.
Top 3 Stablecoins of 2021
1) USD Coin (USDC)
“Going from ACH bank transfers to USDC transactions is going from roller skates to a motorcycle. Circle was one of the first companies to meaningfully solve the problem of tokenizing US dollars and moving that value around on a blockchain. The company’s staying power all these years later is testament to its ability to quickly and effectively transmit money without any drama or uncertainty.”– Dylan Love, Host of Crypto Hot Seat, Token Metrics
Arriving in 1st place with over 40% of the total vote is the stablecoin, USD Coin. These results come as no surprise as USD Coin as the project has grown to be the largest stablecoin industry ecosystem in the world. By market cap, USD Coin is the second-largest stablecoin in the space.
As a stablecoin, USD Coin anchors its value to the US dollar and operates on various blockchains like Algorand, Ethereum, and Solana, to name a few. Like other stablecoins, USD Coin is fully backed by cash, cash equivalents, and short-term US Treasuries so that it is always redeemable 1:1 with US dollars.
Each month, USD Coin publishes attestation reports by Grant Thornton regarding the reserve balances backing USDC. It is also important to note that the USD Coin reserves remain in FDIC-insured US banks.
USD Coin is powered by Centre, a technology founded by Circle and leading crypto exchange Coinbase. Centre is what makes it possible for USD Coin to exchange between people, businesses, and financial institutions.
Token Metrics’ Analysis of USD Coin
2) Tether (USDT)
“Despite the scandals that Tether has been through, it’s still the number one stablecoin based on market cap and cash inflows.” – Ian Balina, Founder and CEO of Token Metrics
Arriving in 2nd place with roughly 39% of the total vote is the stable coin, Tether. This result also comes as no surprise as Tether is currently the most widely used and adopted stablecoin in the cryptocurrency market.
Tether began trading in the cryptocurrency market in 2015, and its value is pegged to the US dollar in a 1:1 ratio. This valuation means that 1 USDT is equal to 1 USD. Tether is also a fiat-collateralized stablecoin as fiat currency held in Tether’s reserve supports the value of the USDT.
Tether is also committed to transparency as being a fiat-collateralized cryptocurrency means that for every USDT in circulation, a real fiat currency is held in a bank account to back it up. To ensure transparency on this issue and combat claims of being under-reserved, Tether claims to publish the value of their reserves daily through their here. There is still room to be skeptical, though, as an outside firm has not verified its funds since June 2018.
Token Metrics’ Analysis of Tether
3) DAI
“Dai is simple to use, and I believe it will continue increasing in popularity. I received my first Dai transaction in 2018 at a Harvard University crypto event. Since then, it has been my favorite stablecoin.” – Sam Monac, Chief Culture Officer, Token Metrics
Coming in a distant 3rd place is the stablecoin DAI. Launched by the decentralized, independent organization known as MakerDAO in early 2017, DAI is pegged to the US dollar, much like Tether.
What makes DAI a different stablecoin than Tether is that the US dollar does not back it; it is just pegged to it. DAI is instead a crypto-collateralized stablecoin, meaning that another cryptocurrency backs it. In the case of DAI, that cryptocurrency is Ethereum (ETH).
By being a crypto-collateralized stablecoin, DAI reinforces the decentralized nature of cryptocurrency.
Token Metrics’ Analysis of DAI
Honorable Mention: Reserve (RSV)
“Reserve is a promising stablecoin backed by heavy-weight investors like Coinbase, Y combinator, and Peter Thiel.” – Ian Balina, Founder and CEO of Token Metrics
Although not coming close to 3rd place stablecoin DAI in terms of votes, Reserve is more than worthy of an honorable mention in this Moon Awards category.
Reserve is a stablecoin still in the startup stages of cryptocurrency but looks to have a very promising future. The Reserve Project is currently in the testing stages of its cryptocurrency. In this stage, Reserve is actively working with a self-described “international coalition of nations” to determine the best way forward in the cryptocurrency market. Reserve’s design serves to solve currency issues that many of the nations in the coalition, such as Venezuela, face.
Like many other stablecoins, Reserve is currently backed and pegged to the US dollar, but it intends to go off of this peg. Reserve is designed this way as the project’s goal is to have cryptocurrency create a new asset class that is equally stable to fiat currency in the short run and much more stable in the long term.
Two core beliefs define the Reserve Project. First, access to a stable currency should be a human right. The second tenet is that hyperinflation can and will be eradicated with time and persistence.
Token Metrics’ Analysis of Reserve
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