Stablecoins are one of the most important pillars of the modern crypto economy. In an ecosystem characterized by high volatility and constant innovation, they offer stability, liquidity, and efficiency for applications ranging from simple transfers to complex operations in decentralized finance (DeFi).
Although Bitcoin was the crypto that opened the doors to this digital universe, stablecoins likely serve as the entry point for those whose main concern is the enormous volatility involved with transactions in this market.
In this article, we will explain what stablecoins are, how they work, their main uses, and which projects of this type are most relevant in 2025, as well as discussing risks and regulatory trends.
What are Stablecoins? And how many categories do they have?
Stablecoins are cryptocurrencies whose value is linked to a stable asset, usually a fiat currency like the dollar (USD), euro (EUR), or even commodities like gold. Their main function is to reduce the volatility commonly found in digital assets like Bitcoin (BTC) and Ethereum (ETH), creating a secure bridge between the traditional financial system and the crypto universe.
There are three main categories of stablecoins. The first is fiat-backed stablecoins, which maintain reserves in banks — usually in currencies like the dollar or euro — to ensure a 1:1 parity with the issued stablecoin. This model requires trust in a centralized issuing entity, as is the case with USDT (Tether), USDC (Circle), and FDUSD.
The second category is crypto-collateralized stablecoins, which maintain reserves in volatile cryptocurrencies like ETH. To handle volatility, they typically use an over-collateralization mechanism, requiring, for example, the deposit of $150 in ETH to issue $100 in stablecoins. These coins operate in a decentralized manner through smart contracts, as in the case of DAI from MakerDAO.
Finally, there are algorithmic stablecoins, which attempt to maintain parity with fiat currencies through smart contracts that adjust supply and demand based on market incentives. These stablecoins do not have real reserves, which can make them unstable. Several projects based on this model have failed — the most emblematic case was the collapse of UST/LUNA in 2022 — which is why this category is still considered highly experimental.
Regardless of the category, remember: a stablecoin is the crypto that is based on a stable asset and always seeks to maintain that stability. It would be almost like a 'fixed exchange rate' in comparison to the fiat currency world.
What are the benefits of stablecoins?
Stablecoins offer unique advantages that impact both individual users and companies, governments, and financial institutions. Some of the main benefits are:
1. Low volatility
Even within a highly dynamic ecosystem, stablecoins maintain stable value — making them ideal for payments, contracts, and investments with lower price fluctuation risk.
2. Fast transactions with low cost
By operating on public blockchains (like Ethereum, Tron, BNB Chain), stablecoins enable international transfers in seconds, with fees much lower than those of traditional banking systems (SWIFT, remittances).
3. Global access with no bureaucracy
Anyone with a smartphone and a wallet can receive, store, or send stablecoins — without needing a bank account or credit verification.
4. Applications in DeFi
Stablecoins are the foundation of many decentralized protocols: liquidity pools, lending markets, synthetic derivatives, and governance mechanisms.
5. Protection against inflation
Users in countries with unstable currencies (e.g., Argentina, Venezuela, Turkey) have adopted stablecoins as a way to preserve purchasing power in dollars or another strong currency.
Main stablecoins of 2025 by market value
The stablecoin market surpassed $230 billion in market value in 2025, with a predominance of dollar-backed assets.
The most relevant stablecoins, when looking at market value (in the first half of June 2025), are:
1. Tether (USDT)
Market value: > $150 billion;
Issued by Tether Limited, linked to the Bitfinex group;
Widely used by traders due to liquidity and presence across multiple blockchains (Ethereum, Tron, Solana, Polygon);
Still subject to criticism for lack of total transparency in reserves, although audits have improved since 2023.
2. USD Coin (USDC)
Market value: > $60 billion;
Issued by Circle and audited by independent companies;
With strong institutional adherence, it is used by major fintechs and DeFi projects;
Operates on Ethereum, Solana, Avalanche, Arbitrum, and other EVM-compatible networks.
3. Dai (DAI)
Market value: ~ $5 billion;
Issued by MakerDAO, with decentralized governance via MKR tokens;
Collateralized by assets like ETH, wBTC, and partially by USDC;
Its stability depends on the over-collateralization mechanism and community decisions.
4. FDUSD (First Digital USD)
Market value: ~ $1.5 billion;
Growing stablecoin issued by licensed institutions in Hong Kong;
Strong support from Binance, with strategic presence in liquidity pools and token launches;
Direct competitor to USDT in Asia.
5. TrueUSD (TUSD)
Market value: just under $500 million;
With significant growth in 2023–2024, it has started to be included in priority liquidity lists on various exchanges;
Programmable issuance and real-time audited reserve proofs.
How to use stablecoins in practice
Now that you know what stablecoins are, their categories, and five that stand out this year, it’s time to learn how you can utilize them. Stablecoins are extremely versatile.
Here are some common use cases in 2025:
1. Trading on exchanges
They are widely used as base pairs (e.g., BTC/USDT, ETH/USDC), allowing entry and exit from positions without going through fiat currencies.
2. International remittances and payments
Companies and regular users use stablecoins to transfer values between countries, paying minimal fees without banking intermediaries.
3. Passive income in CeFi and DeFi
In CeFi platforms like Binance Earn, you can lock stablecoins for a period and receive fixed or variable returns;
In DeFi, you can provide liquidity to stablecoin pairs (e.g., USDC/DAI), earn interest via lending (Aave, Compound), or participate in strategies like yield farming.
4. Hedging and protection
In times of widespread market decline, many investors "reallocate" their assets to stablecoins as a way to preserve value while waiting for new entry.
5. Payment method in Web3 projects
An increasing number of dApps, DAOs, and marketplaces accept stablecoins as a form of payment for goods, services, and transaction fees.
Risks and regulations: what to watch out for
Although they are more stable, stablecoins are not free from risks:
Risk of collapse (as was the case with UST in 2022) — especially for algorithmic models.
Concentration and regulatory risk, as most stablecoins are controlled by private companies;
Asset freezing by authorities in cases of criminal investigations or sanctions;
Limited interoperability in some blockchain ecosystems.
By 2025, many countries are already discussing specific regulations for stablecoins, requiring issuers to have licenses, regular reports, and reserve audits. This could provide more security to users but may also limit innovation.
Stablecoins: a gateway to the crypto universe!
Stablecoins are much more than just stable cryptocurrencies today — they are the backbone of the modern crypto market. They serve as a unit of account, medium of exchange, liquidity base, and bridge to new financial solutions.
Understanding how they work, their structural differences, benefits, and limitations is essential for any investor, DeFi user, or Web3 enthusiast.
With the advancement of regulation and the expansion of adoption, it seems that stablecoins will continue to gain ground — not only as instruments of stability but as tools for inclusion and global financial innovation.
And you, do you have stablecoins in your wallet?
#Stablecoins #StablecoinRevolution #USDT #DAI #fdusd
---
Photo by user13883487, available on Freepik