The core value of stablecoins is equivalent to their role in the cryptocurrency world, similar to stablecoins, allowing volatile currencies like Bitcoin and Ethereum to have a certain period of stability. Through the development of stablecoins, the global monetary status remains undisturbed! The profit model of stablecoins is also very stable, earning interest on reserves, collecting fees, and profiting from arbitrage, allowing ordinary users to better manage low-risk stability.
What are stablecoins?
Stablecoins: The 'stabilizer' of the cryptocurrency world
Stablecoins are cryptocurrencies pegged to a fiat currency (like the US dollar or euro) or other stable assets (like gold), aimed at reducing price volatility, making them more suitable for everyday payments, transactions, and value storage.
If Bitcoin is the 'roller coaster' of the cryptocurrency world—prices jumping up and down, then stablecoins are the 'brakes' and 'seatbelts' specifically designed for this roller coaster. It is a cryptocurrency tied to fiat currency (like the US dollar) or other hard assets, with a clear design goal: no matter how turbulent the foreign cryptocurrency market is, its price remains stable at a certain value (most commonly $1). In simple terms, it acts as a 'universal reserve' in the crypto ecosystem—serving both as an 'intermediate currency' during transactions (like using it to buy Bitcoin) and as a 'safe haven' (when you don’t want to hold volatile Bitcoin, you temporarily convert to stablecoins for storage), and even as a 'fast lane' for cross-border transactions.
The stablecoin family has three 'distinct members':
● Fiat-backed: The most down-to-earth 'dollar sink.' For example, familiar USDT (Tether) or USDC, where the issuer acts like a bank—when you deposit $1, it issues you one stablecoin. These dollars are locked in a bank account or used to buy low-risk assets like short-term government bonds or bank deposits to ensure they can be redeemed at any time.
● Crypto-asset collateralized: Smart players playing the 'leverage game.' For example, DAI does not need to peg to the dollar but allows you to use Bitcoin or Ethereum as collateral—but at a 150% ratio (for instance, to borrow $100 worth of DAI, you need to collateralize $150 worth of ETH). If ETH drops, the system will automatically 'liquidate' part of the collateral to ensure DAI's price does not crash.
● Algorithmic stablecoins: The 'confidence players' walking a tightrope. They have no prototype and rely entirely on a mechanism of 'smart contracts + market arbitrage' to hold up. Just like the former UST (now collapsed), it used another token LUNA as a 'regulator'—if UST rises to $1.05, you can exchange 1 UST for 1 dollar's worth of LUNA (earning $0.05). Everyone rushes to do this, pushing UST back to $1; and vice versa. But this approach relies entirely on everyone's 'confidence in stability.' Once confidence collapses (for instance, during a market drop when no one wants to take over LUNA), it can fall apart suddenly.
Top ten stablecoins in the world
1. USDT: The most circulated stablecoin globally
The market cap of USDT is $85.117 billion
USDT is a token based on the stable-value currency US dollar (USD) launched by Tether, where 1 USDT = 1 dollar. Users can exchange USDT for USD at a 1:1 ratio at any time. Tether strictly adheres to a 1:1 reserve guarantee, meaning that for every USDT token issued, there is a dollar in the bank account.
Users can wire dollars to the bank account provided by Tether company via SWIFT, or exchange for USDT through exchanges; when redeeming dollars, just reverse the process. Users can also exchange Bitcoin for USDT on trading platforms.
2. USDC: The most compliant stablecoin
The market cap of USDC is $26.584 billion
USD Coin (USDC) is a collateralized stablecoin pegged to the dollar, providing complete financial and operational transparency, operating within the framework of US currency circulation laws, and collaborating with multiple banking institutions and auditing teams. This is the first open-source stablecoin project from the center.
3. DAI: Pioneer of decentralized stablecoins
DAI has a market cap of $4.164 billion
Dai is the largest decentralized stablecoin on Ethereum, developed and managed by MakerDAO, serving as the infrastructure of decentralized finance (DeFi). Dai is issued against fully collateralized on-chain assets, maintaining a 1:1 peg to the dollar, with 1 Dai = 1 dollar. Individuals and enterprises can exchange Dai or collateralize to borrow Dai for safe assets and liquidity. Dai has already found practical applications in areas such as collateralized loans, margin trading, international transfers, and supply chain finance.
4. BUSD
BUSD has a market cap of $3.699 billion
Binance USD (BUSD) is a stable asset backed by dollars, issued and custodied by Paxos Trust Company, regulated by the New York State Department of Financial Services. BUSD is directly sold at a price of 1:1 on Paxos.com and listed for trading on Binance.
5. TUSD
TUSD has a market cap of $3.051 billion
TrueUSD (TUSD) is a platform for marking currency calls and actual assets. It provides legal protection for token holders' dollars, with each TrueUSD token representing one dollar. TrueUSD offers reliable trading tools that enable consumers and businesses to transform currency as creativity.
TrueUSD (TUSD) is similar to the current USDT, a type of 'stable currency' launched by TrustToken, supported by Stanford entrepreneurship, blending transparency and mystery in the cryptocurrency TrueUSD, which is highly trusted in the market as a dollar stablecoin. By establishing a cooperative network with banks and trusts, the company ensures that their tokens will maintain currency stability.
6. XAUT
XAUT has a market cap of $582 million
TetherGold (Gold) is a gold-backed stablecoin launched by TG Commodities Limited. Each XAUT token represents one ounce of gold that meets London delivery standards. After purchase, holders can transfer XAUT tokens from the issued Tether wallet to any on-chain address. The corresponding gold bars will be linked to the specific on-chain address holding TetherGold.
7. Gongfa Party
The market cap of USDP is $429 million
USDP aims to provide liquidity for investors trading crypto assets by offering a 'digital alternative to cash' for immediate transaction settlements across all asset classes. USDP's entire reserves will be 100% collateralized by all held dollars. USDP is built on the Ethereum ERC-20 standard, allowing it to be sent between any two wallets on the Ethereum network. Clients of Paxos can purchase or redeem USDP on their company website. Due to dynamic changes in supply and demand verification at specific platforms, prices in external trading venues may vary. We predict that the price range for dollar-collateralized stablecoins will be from 0.99 to 1.01 based on liquidity and trading commission structures at various exchanges.
8. GUSD
The market cap of GUSD is $153 million
Gemini Dollar is the first cryptocurrency issued by Gemini Trust Company, launched as a token through the Ethereum blockchain, backed by dollars, at a fixed rate of 1 GUSD = $1, and is independently audited monthly, with reports published regularly, ensuring its stability as a virtual currency and the speed and borderless characteristics of cryptocurrency.
9. RSR
RSR has a market cap of $84.277 million
Reserve aims to build a stable, global stablecoin and digital payment system, combining self-regulating demand increments with the characteristic of being supported by 100% or more on-chain rescue assets. The ultimate goal of Reserve is to create a universal store of value—especially in regions where financial infrastructure is unreliable and/or inflation is severe. The Reserve project is supported by influential investors such as Peter Thiel (co-founder of PayPal), Sam Altman (president of Y Combinator), and many others from Silicon Valley and the digital asset space.
Reserve Rights Token (RSR) is mainly used to maintain the price stability of reserve tokens. Reserve tokens are stablecoins issued by the reserve system and can be held and used in the same way we use fiat currency and other tokens.
10. European Petroleum Company
The market cap of EUROC is $81.0502 million
Euro Coin (EUROC) is issued by Circle under the same full reserve model as USD Coin (USDC), being a trusted dollar digital currency with a circulation exceeding $55 billion. Euro Coin is designed for stability, 100% backed by euros in bank accounts at the euro price, with a 1:1 exchange rate for euros.
The difference between stablecoins and Bitcoin
Speaking of stablecoins, I guess you might just be getting into the crypto space, and you need to understand that USDT and BTC are not the same.
Actually, this confusion is quite common. Because for outsiders, as long as it has 'coin' in its name, it all looks similar. But to be honest, stablecoins and Bitcoin are fundamentally different.
Their pressures are not from the same source.
What is Bitcoin?
It is a decentralized digital asset. Simply put, it has a price and can fluctuate greatly. Holding it means betting that its price will rise in the future, similar to digital gold. It is inherently a 'high-risk investment'.
What about stablecoins?
The most crucial characteristic of stablecoins is that they must be 'stable.' It is pegged to real-world fiat currencies, such as USDT or USDC being one dollar. Theoretically, 1 USDT ≈ 1 dollar. It is not meant to rise; it is meant for 'use.'
You can think of it as 'digital cash' in the crypto world; it is like the balance in your bank account, but runs on your blockchain—can be traded, circulated, and transferred across borders at any time, with no bank restrictions, no working days, or holidays.
So how does it achieve stability?
The most mainstream stablecoins are 'collateralized centralized stablecoins,' such as USDT (Tether) or USDC (issued by Circle). They have asset backing: when you deposit $100, they issue you 100 USDT. This 100 USDT can theoretically be exchanged for $100 at any time (though in practice, there may be premium or discount issues).
There are also 'decentralized stablecoins,' such as DAI, which use over-collateralized crypto assets to maintain a value of $1. However, the mechanism is more complex, and fluctuations are slightly larger.
The most notorious type is 'algorithmic stablecoins,' such as the previously collapsed LUNA + UST, which is a true lesson learned.
So why stablecoins in the crypto space?
Because it is the infrastructure of the entire crypto space.
When you enter an exchange to buy coins, the transactions you use are basically BTC/USDT, ETH/USDT;
When you want to avoid a downtrend, the first thing you do is convert to USDT;
On-chain staking, Bitcoin, new listings, airdrops all require stablecoins;
When you transfer money across borders or exchange currencies off the market, sometimes stablecoins are more convenient than banks.
So, don't be fooled by its lack of movement; it is actually the 'most liquid, most frequently used, and most practical' tool in this circle.
What is the fundamental difference between it and Bitcoin?
In short: Bitcoin is for speculating on the future, while stablecoins are for survival.
When you trade BTC, you are bullish on it; when you hold USDT, you are avoiding volatility, transferring assets, fleeing, engaging in high-frequency trading, or setting up grids. They are both called coins, but their nature is completely different—just like 'stocks' and 'bank account balances' cannot be confused.