10 Stablecoins You Can Count On During Volatile Times

June 23, 2023 - In the world of cryptocurrencies, market fluctuations can lead to drastic changes in the value of digital assets. During volatile times, investors often seek refuge in stablecoins - cryptocurrencies designed to maintain a stable value by pegging them to a reserve of assets, such as fiat currencies or commodities. 

Here are 10 stablecoins you can count on during volatile times to help protect your investments and provide a safe haven in the ever-changing landscape of cryptocurrency.

 

What Are Stablecoins?

A stablecoin is a cryptocurrency that has a fixed price. The idea behind them is to reduce the volatility of cryptocurrencies and make them easier to use as mediums of exchange. Stablecoins are often used in cryptocurrency exchanges, but they're increasingly being used in real world transactions as well.

These digital assets are designed to maintain a stable value, often pegged to a fiat currency or other assets. With the recent fluctuations in the Ethereum price USD, it's more important than ever to be aware of the best stablecoins on the market.

Some stablecoins are backed by a reserve of the asset they represent, while others use algorithms and other mechanisms to maintain their value. They are often used for international payments, as they can be sent within seconds and cost significantly less than traditional methods.

 

What Are the Different Types of Stablecoins?

Stablecoins are cryptocurrencies that have their value pegged to another asset, such as fiat or gold. The most popular types of stablecoins are:

Fiat-Backed Stablecoins

Fiat-backed stablecoins are cryptocurrencies whose value is pegged to the value of a fiat currency. They are backed by government-issued currencies, such as USD, GBP, EUR, JPY etc.

Stablecoins have become popular in recent years thanks to their ability to provide investors with a safe haven during volatile market conditions.

Crypto-Backed Stablecoins

Crypto-backed stablecoins are backed by a cryptocurrency. The cryptocurrency is held in a reserve account and can be redeemed for the stablecoin at any time. The most popular crypto-backed stablecoin is USDT, which is pegged to the US dollar.

There are also fiat currency backed stablecoins such as EURS, JPYB and GBPB that are pegged to their respective fiat currencies (Euros, Japanese Yen and British Pounds). These currencies aim to provide users with an alternative way of storing their funds without having them lose value due to market volatility or inflationary pressures from government policies.

Algorithmic Stablecoins

Another way to maintain a peg is through an algorithm, which can be used to adjust the supply of currency based on market conditions. The most well-known example is Basecoin, whose algorithm uses a combination of price feeds, market indicators and other data to adjust the amount of currency that is issued. This allows it to maintain its peg with less volatility than traditional stablecoins because it doesn't rely on human intervention for adjustments.

Commodity-Backed Stablecoins

Commodity-backed stablecoins are backed by the value of a physical commodity. Examples include XRP (XRP), gold (GOLD), platinum (PLAT), silver (SILV) and oil (OIL).

While this sounds like an easy way to guarantee stability, there are some drawbacks: it's difficult to find reliable sources of supply for these commodities; they're also not easy to trade in large quantities due to their physical nature; and lastly, they're subject to price fluctuations just like any other asset class.

 

Best Stablecoins in 2023

While Terra Luna Classic, LUNC is not a stablecoin itself, its LUNC price can be an indicator of market conditions and investor sentiment. During volatile times, investors may turn to stablecoins mentioned below  to preserve their assets and minimize risk. 

If you're looking for a stablecoin, these are the top 10 to consider.

1. Tether (USDT)

Tether is one of the most popular stablecoins in the world. It is a fiat-backed stablecoin and it has been used by many crypto exchanges and wallets for a long time. Tether's popularity makes it one of the most liquid stablecoins in existence today, with an estimated daily volume over $2 billion USDT/day.

2. Binance USD (BUSD)

Binance USD (BUSD) is a stablecoin that is also a crypto-based currency. That's right, it's not just backed by the US dollar, but it's also created on top of Ethereum and ERC20 tokens. You can use this token to trade on Binance and other exchanges with ease.

Binance USD (BUSD) was created as an alternative to Tether because it allows users to transfer funds between different blockchains without having any issues whatsoever. It's not just for trading purposes either; you can use it as an everyday payment method like Paypal or Venmo.

3. TrueUSD (TUSD)

TrueUSD is a stablecoin that is fully collateralized by the US dollar, so you can always redeem your TrueUSD for $1.00. It is 100% transparent and audited by third-party attestations, making it one of the most trustworthy stablecoins out there.

4. USD Coin (USDC)

USDC is a stablecoin backed by the US dollar. It is a centralized stablecoin, meaning that it's issued and controlled by one entity. USDC is also trustless, meaning that users don't have to trust any third parties or intermediaries to hold their funds and issue tokens on their behalf. Finally, USDC is a crypto-backed stablecoin which means that each token can be redeemed for $1 worth of fiat currency through its issuing company's platform (Circle).

5. Dai (DAI)

Dai (DAI) is a decentralized and open-source cryptocurrency that's backed by collateralized debt positions. It was created by MakerDAO, which also supports the underlying protocol of Ethereum Classic (ETC).

It is the first decentralized stablecoin on Ethereum blockchain and it can be used as an alternative to Tether (USDT), which has been accused of being backed by questionable assets. Dai works in much the same way as USDT does.

6. Reserve Rights (RSV)

Reserve Rights (RSV) is a decentralized stable coin that is backed by gold. It's a stablecoin that is fully collateralized with gold and has an auditable reserve of bullion stored in vaults around the world. RSV tokens are basically tokenized versions of the gold standard, which was used as a global monetary system prior to being replaced by fiat currency in 1971.

7. USDD (USDD)

USDD is a stablecoin issued by Circle, which is a Goldman Sachs backed company. The stablecoin is backed by USD on a 1:1 ratio. This means that for every dollar you put into the system, you get another one back from it. You can also use your USDD to make payments and purchases on their platform as well as transfer it to other users via their mobile wallets or desktop app.

Circle is regulated by the New York State Department of Financial Services (NYSDFS), which means that you can trust them with your money without worrying about getting scammed or having your funds stolen by hackers.

8. Frax (FRAX)

The Frax token was created by a group of economists who want to use cryptocurrency to create a new financial system that is fair to all participants. They want to create a platform where people can borrow money using their cryptocurrencies as collateral. The nice thing about Frax is that it is backed by physical assets and fiat currency, which makes it a well-established coin with a lot of potential.

9. Fei USD (FEI)

The 9th best stablecoin to look into during volatile times is Fei USD (FEI). What it does: It's a digital currency that you can use as an alternative to traditional money. How it works: The value of each FEI is backed by one dollar, so if you have 100 FEIs and the price of one FEI drops from $1.00 to 0.90 cents per coin, then your total value would be 90 cents ($100 - 10% loss). You can buy it on Binance and KuCoin exchanges.

10. PAX Gold (PAXG)

PAX Gold (PAXG) is a stablecoin that's backed by physical gold. It has been in operation since October 2018, and it is currently trading at $1.01 USD per PAXG.

The idea behind PAX Gold is to provide users with a way of storing value in something that cannot be manipulated or controlled by governments or central banks. The platform uses smart contracts to ensure that there are always enough tokens available on the market at any given time, which helps keep its price stable against other cryptocurrencies (such as Bitcoin). This makes it ideal for those looking for an alternative way to invest during volatile times such as these.

 

Conclusion

In conclusion, we have seen that there are many types of stablecoins available in the market. To determine which one will work best for you, it's important to do your research and understand what type of coin is most compatible with your goals as well as risk tolerance level.