Stablecoins are one of the hottest assets in 2020. This cryptocurrency class is making waves due to the combination of security and privacy seen with digital assets, coupled with fiat currencies’ recognizable nature and stability.
Stablecoins backed by fiat currencies are specifically pegged to the value of that asset and cannot fluctuate much (or at all).
Ones backed by assets like precious metals will never fall below the spot or base price of the reserve but might actually surge in value if market conditions are right.
Stablecoins are a popular investment choice for investors eager to mitigate volatility and risk with their investments. They are often utilized as a safe haven in times of economic uncertainty or high inflation.
Stablecoins are also deployed to purchase cryptos on exchanges that do not accept fiat.
The cryptocurrency market has seen major changes in 2020. Assets like Chainlink surged out of obscurity, while the continued rise of decentralized finance (Defi) has revolutionized the digital currency world forever.
Many crypto enthusiasts and investors remain curious about which stablecoins remain on the rise in 2020. Which assets should be paid close attention to? Here’s a list of the top five stablecoins currently on the market and on the rise this year.
DAI: Created by MakerDAO, DAI is one of the most unique stablecoins available. Running on Ethereum, the coin is actually backed by collateral on Maker’s platform while maintaining a value of $1 per coin. DAI’s unique structure makes the coin appear more transparent than other options, as the cryptocurrency can only be created and destroyed by users. In order to protect against market changes and conditions with the leading global fiat currency, DAI relies on margin trading.
Paxos Standard: The PAX stablecoin is another intriguing option that has rapidly gained popularity since its launch. More than 40 exchanges offer the coin, which remains one of the most heavily adopted tokens in the stablecoin world. Backed by the U.S. Dollar at a 1:1 ratio, reserve currency is held at FDIC-insured banks in the United States. The stablecoin has also been approved by the New York State Department of Financial Services, giving the coin great legitimacy in the digital currency world.
PalladiumCoin: Stablecoins backed by gold or silver might seem more alluring, but palladium is one of the globe’s most valuable and expensive metals. PalladiumCoin.com lets holders buy, sell, and trade coins backed by palladium, an essential component in a car’s catalytic converter. Its use in turning toxic gases into less harmful elements has sent the price of palladium soaring. Users who purchase the cryptocurrency (in fractional amounts) have the option of redeeming for 99.9% palladium from a secure storage location. PalladiumCoin.com is an ERC-20 stablecoin able to be held with a variety of popular and secure crypto-wallets.
USDCoin: USDCoin is the result of a joint venture between Coinbase and Circle. Distributed on the Ethereum blockchain, each USDC is pegged to the U.S. Dollar at a 1:1 ratio. The coin is a popular option for stablecoin investors and enjoys high trade volume due to its unique tokenization process. Anyone who is interested in acquiring USDC can send dollars to the issuer’s bank account. A smart contract is then issued to send the proper amount of USDC tokens while keeping dollars in reserve. The simple and effective process makes minting new USDC tokens an easy task. The partnership with financial services company Circle has helped the coin attract entities like Goldman Sachs.
EOSDT: The EOSDT coin is the asset of the Equilibrium smart contract platform. The coin is unique as it is the globe’s first decentralized stablecoin built on the EOS blockchain. While each EOSDT is pegged to the U.S. Dollar, the coin is unique as users can choose the underlying asset for generated EOSDT. Collateralization options are set into the smart contract once a user takes advantage of the Equilibrium platform to generate coins. Ensuing tokens can be stored, exchanged for other options, or sent as payment for goods and services. The unique nature of EOSDT makes the stablecoin a rising option in the world of cryptocurrencies backed by assets.
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From 2020 And Beyond, Stablecoins Look To Remain Popular
Many stable coins have posted triple-digit market growth across 2020. USDC coin alone has enjoyed a supply jump of at least 250% since the start of the year. Projections are stablecoins will continue to remain in the public eye, especially as entities like Facebook look to offer their own tokenized money options for consumers.
One stablecoin project, Finality, which is spearheaded by UBS Group, estimates now it will receive approval for its coin by Q2 2021. The race appears to introduce new stablecoins into the market – boosting the industry’s prospects overall.
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