Stablecoins like USDT, USDC, and BUSD are fiat-backed cryptocurrencies. A combined market cap of $120 billion proves that they are here to stay. But what makes them unique? Learn more.

are cryptocurrencies whose values are pegged to a stable asset, mostly fiat currencies. Tether (

) and Binance USD (BUSD) are the three most popular stablecoins, with a combined 

 of $120 billion. However, with the recent buzz around BUSD, there’s no doubt that most investors would be curious to know if BUSD is still worth investing in — or if you should simply pile your investments into USDT, USDC or other 

While stablecoins are known to allow faster, lower-cost and safer transactions without the limitations associated with traditional banking, such as location-based restrictions and lack of financial services during holidays, investors nowadays are uncertain following the May 2022 collapse of TerraUSD (UST).

Despite this, the global cryptocurrency market is forecasted to rise to above 

, proving the popularity of cryptocurrencies worldwide.

Stablecoin is a type of cryptocurrency that’s more reliable and less volatile than its high-profile counterparts like Ethereum and Bitcoin, which means there’s more significant potential for safer investments. 

But which stablecoin should you trade? How do stablecoins compare to fiat currencies? Below, you’ll learn everything about the three main stablecoin supplies and how they differ from each other.

A stablecoin is a cryptocurrency that has its value associated with another asset class, like gold or 

, “True stablecoins are non-interest bearing coins designed to have stable value against a reference currency — say $1 [one U.S. dollar].” Although mainstream crypto assets like Bitcoin are beneficial because you don’t need to trust an intermediary institution, they’re highly susceptible to price fluctuations.

Stablecoins eliminate this flaw by tying the currency’s value to another stable asset, mostly fiat currencies such as dollars or euros.

The coin’s issuer has a “reserve” with assets that assure buyers the issuer can redeem the outstanding coins.

The first stablecoin was created in 2014 and named Tether. Most other stablecoins are modeled after Tether, with users receiving a single token for every dollar.

Theoretically, users can get their original currency — dollars — back at a 1:1 exchange rate. Initially, people used stablecoins to buy common cryptocurrencies, such as Bitcoin, as many exchanges didn’t have banking access.

Thus, stablecoins were a more reliable option, available 24/7 worldwide, and without requiring reliance on traditional banking channels. In addition, money transfers are completed in a matter of seconds.

What Factors Have Contributed to the Growth of Stablecoins?

 gave rise to the concept of stablecoin. Unlike many other currencies, the code in a smart contract helps refine the agreements of a contract to facilitate the seamless transfers, lending and payment of money, with limited human intervention. 

Still, the primary factor fueling the popularity of stablecoins is their almost negligible volatility as compared to conventional cryptocurrencies. On top of that, industry partnerships also contribute to the growth of stablecoins.

For instance, in a recent corporate move, 

, the blockchain maestros behind USDC. This partnership allows Circle corporate cardholders to spend their USDC stablecoin at merchants who accept Visa.

Even better, the U.S. Treasury’s Office of the Comptroller of the Currency (OCC) has 

 for banks to use stablecoins like USDC. 

Thus, federal savings associations and banking channels can now use blockchain for coins like USDC, just as with SWIFT transfers or ACH.

The future seems bright for stablecoin holders, since the currency may offer a widely accepted payment method to cut costs on data processing and international transfers. Moreover, banks may use stablecoins to minimize the threat of digital challenges.

It’s also likely that digital wallets such as Cash App and Venmo — which have recently enabled crypto purchasing — may use stablecoins in the future to make peer-to-peer (P2P) payments a breeze.

Although there are dozens of different stablecoins, the three most common ones are USDT, USDC and BUSD.

 (the symbol for Tether) is a stablecoin pegged to the U.S. dollar at a 1:1 exchange rate. Thus, one U.S. dollar is equivalent to one USDT. Buyers can spend, transfer or trade USDT as they would their regular fiat currency. Tether is issued by iFinex, the Hong Kong-registered company that also owns the crypto exchange Bitfinex.

Initially, USDT was created to tackle the following issues:

Tether is in the limelight as the third-biggest cryptocurrency in the world and continues to be the largest stablecoin by market cap in front of USDC.

However, USDT is known not to be transparent about its reserves. In 2019, they claimed that every USDT is backed by one U.S. dollar in cash, held by the company, but in 2021, Tether (the company) was fined $41 million by the U.S. Commodity Futures Trading Commission (CFTC). This was due to Tether’s false claims that its USDT stablecoins were fully backed by real-world fiat money.

Tether has since had an audit in May 2021 and updated its website to include more details about its cash reserves. A shocking revelation is that it only held 2.9% of its reserves in cash back then. However, that number has since increased, and Tether has begun releasing monthly transparency reports.

Although a few controversies surround Tether’s stability at $1 and the actual amounts of U.S. dollars backing each USDT coin, there are still many reasons to prefer the coin over regular currency, as we’ll discuss below.

 is another stablecoin with its price pegged to the U.S. dollar. It’s issued by Centre Consortium, LLC, which consists of Circle and Coinbase, to speed up fund transfer times and reduce volatility associated with Bitcoin and other cryptocurrencies.

As an Ethereum token, USDC can be stored in a wallet compatible with blockchain. Besides facilitating transfers, USDC also allows users to benefit from higher yields when lending their stablecoins through different 

The popularity of the USD coin has increased significantly in the past few years, with a daily average of $4 billion sent through the Ethereum network in March 2023. Its popularity has also landed itself 

 with leading crypto exchanges, such as Bybit, to launch USDC Spot pairs to promote its adoption. To further support USDC, Bybit has recently also launched its 

 with three events that users can participate in.

, from Algorand, Avalanche, Solana and Tron to Hedera, Polygon and more, growing their adoption as crypto becomes multichain.

 to prove that they have an equivalent amount of USD backing their USDC to assure investors that they’re fully backed. However, the recent news of the USDC depegging has left many uncertain.

 of the Silicon Valley Bank, which held $3.3 billion (or 8%) of USDC reserves on Mar 10, 2023. While federal regulators stated that all depositors, including Circle, would be able to retrieve their funds, it didn’t stop USDC from 

 to a low of $0.869 on the Kraken exchange. 

Circle was then hit with another slew of unfortunate news over the weekend: the closure of Signature Bank resulted in its product, Signet, being closed too. This meant that Circle was no longer able to mint or redeem USDC through its Signet feature. Circle has clarified that it does not hold any USDC reserves with Signature Bank, and only uses it for transactions and settlements. 

According to an update by Circle on Mar 12, it holds $9.7 billion of its USDC reserves in cash, and $32.4 billion in short-dated government securities. Another $5.4 billion of the USDC cash reserves are held at Bank of New York Mellon Corp., and $1 billion at Customers Bank.

Circle reported that it had tried to move its reserves out of Silicon Valley Bank on Mar 9, but this wasn’t done by Friday due to the closure. It holds hope that the transfer will be settled on Mar 13. If the reserves aren’t retrieved, Circle has promised to fill the gap using internal resources, as well as external investments if necessary.

The hopeful news has caused USDC to inch closer to its peg, and as of Mar 13, 2023, its price is at $0.984.

Binance and Paxos founded BUSD to provide transactions with three important qualities: Speed, flexibility and accessibility.

Simply put, Binance USD is a fiat-backed and regulated stablecoin with the same worth as a U.S. dollar. For every Binance USD someone buys, there’s a single dollar held in reserve. As the U.S. dollar’s price fluctuates, this stablecoin’s value also rises or falls accordingly. BUSD holders can exchange their stablecoins for U.S. dollars, and vice versa. Moreover, Binance USD exists on BNB Chain and Ethereum.

Therefore, BUSD holders can exchange stablecoins between these blockchains per their requirements. BUSD also has 

 to prove that they have an equivalent amount of USD backing their USDC to reassure investors.

However, on Feb 13, 2023, it was announced that Paxos had received a Wells notice from the U.S. Securities and Exchange Commission (SEC) indicating that BUSD was considered to be an unregistered security. The New York Department of Financial Services (NYDFS) also revealed data showing that there were not enough reserves backing up the BUSD issued by Paxos, and thus 

 or released. While Paxos denied the claims, it has since ceased the issuance of BUSD and ended its partnership with Binance.

 to $0.20 on Binance following a single market sell order of $647,000. While it immediately regained its peg, it created an opportunity for arbitrage traders to purchase BUSD for under $1 on Binance and sell it on other exchanges for $1. 

As of Mar 1, 2023, more than $6 billion has been pulled out of BUSD. In the meantime, Binance has laid out plans to diversify its stablecoin away from BUSD. Binance has recently launched TrueFi perpetual contracts on its platform, and it’s minting more TUSD tokens as an attempt to meet their stablecoin needs.

This table compares the differences between the three stablecoins that account for most of the stablecoin market.

Back in May 2022, Tether started to lose its market cap against USDC, especially after 

 was depegged. On May 9, UST started to depeg and, as investors worried about the risk of USDT, they also started selling it. Since then, USDT has lost $11 billion in market cap (a drop of about 15%) as holders began exchanging it with USDC instead, along with some also redeeming USDT into USD fiat. At one point, on May 12, USDT even depegged by around 4% on Binance. However, it quickly recovered back to its peg by the end of the day, as redemptions were fully met and investors were reassured.

Due to this event, USDC’s market cap rose from $49 billion to $54 billion, an increase of about 10%. However, as of Mar 13, 2023, its market cap has decreased to about $40 billion due to the collapse of Silicon Valley Bank. Despite this, there’s no doubt that USDC has come a long way from just $4 billion in market cap at the start of 2021.

Following the events of the ban imposed on BUSD, the Paxos-issued stablecoin has now dropped in market cap, from about $23 billion in November 2022 down to $8 billion. BUSD used to rank sixth in terms of market cap, but it has now sunk to 11th place. 

One of the significant differences between these three major stablecoins is in their blockchains. A 

 is a system that records transactions in a way that uses an immutable cryptographic signature to eliminate or minimize the risk of hacking or cheating the system.

Having different blockchains results in a variety of advantages and disadvantages, such as the speed and utility of transactions. While USDT runs on only a single blockchain, USDC and BUSD have multiple blockchain options, allowing buyers to trade and transfer across them. 

Although stablecoins achieve their price stability via collateralization of buying and selling the reference asset, they may fluctuate slightly from their token price, and then gradually return to the original value. USDT’s stability is quite reliable, as the stablecoin has managed to remain steady at around $1. Similarly, Binance USD and USDC are now also close to $1 despite recent events.

However, the 2021 controversy surrounding Tether’s claim that it has enough dollar reserves (while economists and investors suspected that it didn’t), as well as the recent BUSD controversy that caused BUSD to slip to $0.20 on Binance, make both coins less reliable. Compared to USDT and BUSD, USDC is steady and devoid of controversy.

The “volume” of a stablecoin refers to the total trades occurring, while “liquidity” refers to the number of coins available for trading at the set price, which is $1 in this case. As the volume increases, typically, the liquidity does too.

A stablecoin with a high volume makes it easier for investors to trade their coins. As of Mar 13, 2023, the daily trading volume for USDT is $63.3 billion, which is higher than that of the other two currencies. USDC has a volume of $9.3 billion, and the Binance USD stablecoin has a trading volume of $8 billion. The total 

, and has started to drop and is now at 133 billion. USDT remains the largest stablecoin by market cap, with a total 

 of over 72 billion USDT, while USDC has a circulating supply of 40.4 billion USDC and BUSD has a supply of 8.3 billion BUSD.

Despite their differences, stablecoins have the following benefits:

Stablecoins such as USDC can be used for multiple purposes, such as storing value, accessing yield in the market enabled by blockchain, and for payments. Here are some lucrative uses of stablecoins.

Typically, “trending pairs” in cryptocurrency refers to assets that users can trade for one another through an exchange.

These pairs allow buyers to compare the costs of various digital assets. For instance, a 

 will let you know how many USDT equals one BTC.

When you have stablecoins, such as USDC and others, in your possession and want to trade them, you can check for the pairing on the exchange. 

DeFi, or decentralized finance, refers to an ecosystem comprising blockchain-based financial applications that operate without a central administration or third party, such as a bank or other financial institution. Since DeFi employs a peer-to-peer model, everyone can connect irrespective of their location.

, you can lend your stablecoins to a borrower and earn interest. This benefits both borrowers and lenders, since users can get loans at much lower rates than if they used decentralized exchanges (DEXs). Meanwhile, long-term investors can earn interest rates on the coins they lend.

 (automated market maker decentralized exchanges) gaining popularity, users can provide liquidity with their USDC on their favorite pairs, such as ETH/USDC, and earn 

Some of the most popular AMM DEXs include 

 network, passively generating millions in revenue for liquidity providers. However, the downside is that liquidity providers may incur an

Due to the fallout from UST’s depegging and crash affecting thousands of users all over the world, the lack of transparency in USDT — which is the biggest stablecoin in crypto — and the ban of BUSD, regulations will likely be a big topic moving forward.

Stablecoins operate outside of the U.S.'s financial system, and as they get bigger and more mainstream, policymakers and regulators will pay more attention to them to protect the average Joe and prevent systemic risks.

The U.S. Federal Reserve and agencies of other nations are working on offering their own central bank digital currencies (

s), and depending on how they view stablecoins, it could affect the entire crypto market in the future. With rising interest rates and high inflation all around the world, especially in developing countries, a regulated USD stablecoin is likely to receive a lot of attention and adoption.

Although USDT has a high market cap and volume, most economists (interestingly enough) may not consider it to be the best stablecoin. The reasons behind this lack of trust are the gaps in transparency and auditing of USDT.

USDC has greater transparency than USDT. Moreover, it’s comparable to USDT in terms of its exchange rate and blockchain. Thus, USDT is a better pick for people who prefer investing in a cryptocurrency with a higher volume and liquidity, while USDC is preferable if you value transparency.

Comprising almost 90% of the stablecoin market cap, USDC and USDT are undoubtedly the ideal options for investors who want to dabble in the stablecoin market. Since the future of BUSD is still unknown, we’d recommend doing your own research before investing in it.

With vendors becoming comfortable with the idea of using stablecoins, the future of this cryptocurrency class looks hopeful. So if you’re planning to jump on the bandwagon, now is a great time to do so.

Beginner

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USDT vs. USDC vs. BUSD: How Are They Different?

Keen on learning about the differences between USDT and FRAX? These are the best stablecoins that you can buy to avoid volatility or try your hand at staking.

Looking for a list of top stablecoins? You're in the right place. After the dramatic collapse of TerraUSD (UST) and the recent troubling buzz around Binance USD (BUSD), investors are becoming increasingly skeptical when it comes to an understanding of the actual stability of stablecoins. From being backed by actual dollars in a bank account to relying on a decentralized protocol, stablecoins exist in various forms. This comprehensive guide to the best stablecoins will explain what stablecoins are, the different types to watch for, and some examples of the top stablecoins in the crypto market. 

Stablecoins are cryptocurrencies that have their price pegged to, and are backed by, a singular reserve or group of assets. These price stabilization reserves can range from fiat currencies and national currencies to algorithms or commodities. 

If you're new to crypto, you might be wondering about the use cases of stablecoins. Their most common form of utility is as a medium of exchange. 

Altcoins or even Bitcoin can appear extremely volatile. Their values can wildly fluctuate because of huge inflows and outflows of funds. This can be cumbersome if you're looking to use your crypto as a medium of exchange. Thankfully, with stablecoins, the value of your assets can be preserved as they're meant to maintain their dollar-pegged value. This makes it easy for investors and traders to on-ramp their fiat and convert it into crypto, as the exchange can be made with minimal price volatility.

On top of being a solid medium of exchange, crypto enthusiasts also use stablecoins to participate in 

 (DeFi) projects that involve the lending or staking of stablecoins. Doing this provides investors with passive, low-risk yield as they provide extra liquidity on the platform. This ultimately makes staking or lending stablecoins a viable option for investors during periods of high volatility and/or bearish sentiments.

Now that we've covered the basics of what stablecoins are and their various use cases, let's move on to the different types of stablecoins in the crypto space.

What Are the Different Types of Stablecoins?

Fiat-backed stablecoins are, as the name suggests, pegged to a 

. Fiat currency is essentially not backed by a commodity and is issued by a government. These types of stablecoins typically have a reserve of an equal amount of fiat currency to which they’re pegged. For instance, USD Coin is a top stablecoin that’s largely backed by the U.S. dollar. Fiat-backed stablecoins can be used for transactions, just like other cryptocurrencies, and are considered more reliable.

In essence, these stablecoins are backed by a group of cryptocurrencies. By relying on another cryptocurrency as collateral, the average investor may understandably fear that the crypto-backed stablecoin will be highly volatile. To relieve these worries, such crypto-backed stablecoins are generally overcollateralized to make sure they maintain their value throughout periods of massive price fluctuations.

Unfortunately, UST's implosion has smeared the reputation of the best algorithmic stablecoins, despite solid examples like FRAX and DAI maintaining solid track records. Also called non-collateralized stablecoins, 

 do not have standard fiat or commodity collateral. These decentralized coins are made to help boost stability in market prices without connecting a central authority. Algorithms include special stabilization measures, which are hardcoded on Ethereum smart contracts for the stablecoins. To combat periods of volatility, the supply of algorithmic stablecoins is highly responsive to market forces.

On a more technical level, an oracle contract is used to assist these algorithmic smart contracts in execution. These contracts help by retrieving pricing information for algorithmic stablecoins on other exchanges. Following this, the price periodically enters a rebasing contract to determine if supply should increase or decrease. The contract then analyzes the number of tokens to mint or burn from user wallets based on the information gathered. 

Some stablecoin teams have gone one step further to make their algorithmic stablecoins partially collateralized. For example, FRAX is partially collateralized by fiat-backed stablecoin USDC and FXS, the Frax protocol's governance token.

Like fiat-backed stablecoins, these stablecoins are backed by external assets that aren’t cryptocurrencies. In this case, commodity-backed stablecoins are pegged to precious metals like gold. While commodities also fluctuate in price, they tend to hold value better in times of economic inflation than other forms of assets.

Commodity-backed stablecoins are useful for investing in assets that aren’t always easy to source in a nearby geographical location. For example, physically buying and storing gold can be expensive and inaccessible in many places. However, by purchasing commodity-backed stablecoins, investors can gain access to a tokenized form of rare metals.

In order to determine the best stablecoins, we must first understand what makes a good one. On a fundamental level, the best stablecoins must provide transparency in their holdings. Also, top stablecoins need to have a high trading volume so they can act as a liquid medium of exchange. These two factors combined provide a base on which to build confidence with investors, who can trust the stability of the stablecoin, knowing that it’s backed by a credible reserve of assets and that it can be easily exchanged with other stablecoins.

From UDSC to DAI, here are some of the best stablecoins you can consider including as part of your portfolio. 

If you're a crypto veteran, it's no surprise that 

 (USDT) tops our list of stablecoins. Originally known as Realcoin, the Tether stablecoin was officially released in 2014 and was one of the earliest stablecoins. It’s backed by multiple assets that include traditional currency and cash equivalents, ranging from bonds to commercial paper. While there have been rumors about how Tether isn't fully backed, the team recently made a move to publish 

In the past month (early 2023), 24-hour trading volume ranged between $18 billion and $50 billion, making it one of the top stablecoins if you're seeking a high-volume stablecoin. On some of the top sites for earning interest on crypto, investors can earn between 10% and 12.5% annual interest for USDT lending. While some investors have said that including more detailed reports would help, Tether's transparency regarding how it works and what backs it is positive. Tether plans to release a full audit to satisfy curious potential investors later in 2023.

BUSD is a collaborative project between Binance and Paxos, and is completely backed by U.S. dollars. These funds are also kept in Paxos-owned bank accounts in the U.S. Since everything is done by the book and is regularly audited, BUSD is one of the few fiat-backed stablecoins to be approved by Wall Street regulators. 

 that have led to a halt of BUSD trading on Coinbase, and it was eventually delisted from the crypto exchange titan.

Although BUSD’s trading volume has shrunk significantly, the 24-hour trading volume still shows a steady range from $6.8 billion and $10.2 billion. Another reason why BUSD is attractive is its interest yields. According to Binance, investors can earn up to 15% interest by lending out BUSD on its platform. This huge yield allows the stablecoin to pose a sizable threat to the likes of stablecoin giants like USDT and USDC.

 was founded by Danny An, Tory Reiss, Rafael Cosman and Stephen Kade in 2018 and gained attention because of its reputation as the first stablecoin with real-time audits and on-chain proof of reserves. To ensure each and every TUSD token is fully backed at a 1:1 ratio by the U.S. dollar, accounting firm 

 performs regular monthly audits to guarantee that TUSD is 100% collateralized. This makes it a solid centralized stablecoin to invest in if you're keen on passively staking stablecoins that emphasize regulation above all else.

During the past month, 24-hour trading volume numbers demonstrate steady growth that ranges between about $45 million and $90 million. In terms of yield, investors can earn between 10% and 12.3% interest on their True USD tokens on some of the top lending platforms.

, composed of multiple well-known figures in the crypto world. The coin launched in 2018 and became one of the top stablecoins because it offered an alternative to USDT. While Tether's holdings remained a mystery at the time, USDC provided proof of its backing by assets derived from the U.S. dollar. This transparency and stability gained from its fiat backing led to USDC taking the number two spot in terms of the amount of USDC being traded every day.

This past month, 24-hour trading volume numbers ranged between $1.9 billion and $4.9 billion. For stablecoin investors looking to earn a safe return, they can visit staking and lending platforms to earn between 6% and 14% interest for lending out their USDC.

However, the recent debacle of Silvergate and Silicon Valley Bank caused USDC stablecoin to depeg its dollar value with prices falling below $1. This causes concern among crypto advocates as more exchanges halt or suspend USDC trades. Still, only time will tell the sustainability of USDC. 

 stablecoin in 2017 when the mere idea of a crypto-backed stablecoin seemed risky and unrealistic. While DAI was originally created to provide a non-volatile lending asset for businesses and individuals, Maker eventually gave governance of DAI to MakerDAO. To quell fears of crypto-backed stablecoin volatility, DAI is overcollateralized with the use of Collateralized Debt Position (CDP) smart contracts. These Maker Protocol smart contracts allow users to lock up their collateral assets, such as ETH, in exchange for DAI. 

To crypto investors, DAI immediately stands out because it's backed by crypto assets rather than fiat dollars. If there were a sudden shift in Dai's value, investors could easily convert their DAI tokens to coins like ETH or WBTC because of the CDP smart contracts in play. Even after ETH's fall below $2,000 in the past few months, DAI has managed to maintain its peg because of its diversified reserves and overcollateralized nature. This makes it one of the best stablecoins in the market because DAI has shown its ability to withstand huge crashes. For reference, DAI's 24-hour trading volume numbers this past month fluctuated between $100 million and $308 million.

 is to provide an alternative to fiat-backed stablecoins that are too centralized. Reserve Rights was developed and launched in 2019 by an entity called the Reserve Project. As one of the top crypto-backed stablecoins, 

 uses baskets of contract-managed cryptocurrencies to maintain its peg. As part of its future plans to become one of the biggest and best stablecoins, Reserve Rights’ team plans to eventually leverage more than 100 low-volatility assets to offer more stability to investors. It's this focus on transparency, decentralization and multi-asset collateralization that makes RSV attractive to investors. 

The past month's 24-hour trading volume numbers ranged between $7 million and $11 million. Although the Reserve platform doesn’t specify an interest rate investors can earn for lending, there is a page that provides a detailed explanation of how 

Although it's one of the newer algorithmic stablecoins, 

 has stirred up quite a storm. After the infamous UST crash, 

 created this coin that retreads the same algorithmic ground while avoiding mechanisms that can contribute to a death spiral. The coin was launched on the TRON blockchain, and is pegged at a 1:1 ratio to the U.S. dollar. With over 50 million accounts already in existence, USDD is potentially shaping up to be one of the most popular stablecoins for investors as it slowly rolls out its mainnet launch plans.

In the past month, 24-hour trading volume numbers were between $20 million and $31 million. According to its creator, investors who stake on the platform may earn up to 30% interest. This ultimately makes it potentially one of the best stablecoins for generating passive earnings as well.

FRAX initially made headlines in 2019 as the world’s first fractional algorithmic stablecoin. The coin maintains its peg by making use of two reserves: Fiat-backed USDC, and FXS, the Frax ecosystem's native token. The ratio of USDC to FXS depends on the collateral ratio, which varies the amount of USDC and FXS needed to mint $1 worth of FRAX. This makes FRAX a partial algorithmic stablecoin, since it has fiat backing on top of its algorithmic backing.

Interestingly, the Frax protocol owns close to 20% of available CVX tokens. This allows its team to direct Curve Finance's liquidity toward their own stablecoin pool of DAI, USDT, USDC and FRAX. By joining hands with such established stablecoin players, FRAX manages to elevate its reputation as a stablecoin that's able to defend its peg in times of high volatility.

Within the past month, 24-hour trading volumes have been between $5 million and $19 million. Although it may not be one of the best stablecoins for earning high-interest rates, it can earn investors about 5% interest on average.

Fei Protocol aims to maintain liquidity such that ETH and FEI trade similarly to ETH and USD. While it has a lower market cap than most of the top stablecoins on this list, 

 makes the cut because of its unique method of preventing depegging. Fei Protocol uses Protocol Controlled Value (PCV) instead of a total value locked (TVL) model. With PCV, Fei Protocol retains user-deposited funds permanently. This gives the protocol full authority to mint and burn FEI to maintain the $1 peg. To ease depegging fears, the protocol reweighs FEI at 4-hour intervals, with the minimum price difference below the fixed point being 0.5%. On top of using a PCV model, Fei Protocol also directly incentivizes the use of FEI by rewarding minting and trading.

Within the last month, daily trading volume totals for Fei USD have ranged between $1.1 million and $2.3 million.

Created by Paxos, PAX Gold is an ERC-20 token on the Ethereum chain. It was 

. Because of the Paxos brand behind the token, with its high transparency, PAXG has emerged to become one of the top commodity-backed stablecoins. It also helps that the government monitors and authenticates each PAXG token.

 in its reserves for each token, and it houses London Good Delivery gold bars. For investors looking to own a tokenized form of gold, PAXG offers a viable alternative.

The 24-hour trading volume numbers during the past month fluctuated up and down between $5 million and $14 million. This high amount of liquidity within the commodity-backed stablecoin market makes it one of the solid options you can look into.

To earn interest on any of the top stablecoins or cryptocurrencies, investors can use platforms like 

 for staking. On top of offering a competitive yield, Bybit offers the advantage of staking under both flexible and fixed terms. This gives investors the freedom and flexibility to pick a staking period that suits their risk appetite. 

 and get started on your passive income journey today.

 offers upgraded features and flexibility for participants to maximize their yields despite market volatility. Simply indicate your desired price to buy or sell your crypto assets based on the predicted market trend. You'll earn interest yields, regardless of your choice of market predictions, upon a predetermined settlement date. 

Decide on a base currency to start trading on the Bybit Spot or Derivatives market across thousands of asset pairs. Bybit offers a wide range of USDT, USDC and DAI-based crypto pairs as a base cryptocurrency that’s pegged with USD. Some of the popular crypto pairs include BTC/USDT, BTC/USDC, ETH/USDT, ETHUSDC, BITUSDT and more. 

Bybit is running a USDC zero-fee campaign on all USDC Spot pairs and on all stablecoin pairs, including USDC/USDT, BUSD/USDT, DAI/USDT and WBTC/BTC. Find out more about the 

We hope our guide has helped you decide what the best stablecoins are and educated you as to their differences. The most popular stablecoins are likely to continue seeing favorable trading volume trends as more investors shift their interest to coins backed by some form of assets, which offer transparency when it comes to what they're backed by. During bearish markets, we're also likely to see more investors stake stablecoins to earn a constant yield while waiting out the negative sentiments.

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10 Best Stablecoins to Look Into During Volatile Times (Updated)

USD Coin is one of the most popular stablecoins, but what is it and how does it work? Bybit Learn takes a look in this beginner's guide.

Cryptocurrencies are known for their high level of volatility, as their prices may skyrocket or dramatically drop in a matter of a few hours, let alone days and weeks. Under such circumstances, a solution is required to keep a coin’s price stable while providing users with all the other perks of decentralized payment options.

In this guide, we’re going to review such solutions with a special focus on USD Coin (USDC), a stablecoin issued by 

 Consortium, LLC, consisting of Circle and Coinbase.

 as “digital units of value that differ from existing forms of currencies and rely on a set of stabilization tools to minimize fluctuations in their price against a currency or basket thereof.” 

Stablecoins are a digital representation of 

 on blockchains, developed to mimic the price of fiat using a stabilization mechanism. This type of cryptocurrency has a stable price, so users can always redeem a single coin for $1 (or for any other currency to which they’re pegged). Stablecoins can also be an instrument for traders to switch to a more stable digital asset when cryptocurrency markets are volatile. 

With the maintenance of a stable rate, regardless of market fluctuations, stablecoins are a financial tool that’s useful for the protection of capital and profits during periods of intense drawdowns. Also, the capability to transfer funds across exchanges without the need to convert them to fiat helps asset holders stay within the cryptocurrency ecosystem. Thus, they’re protected from negative consequences that can arise in some jurisdictions.

Stablecoins are a good solution for unregulated exchanges that don’t provide conversion to fiat currencies. The scope of their application has also been extended to customers with restricted access to foreign currencies. They’re faster and more cost-effective than fiat money. Payments are settled within a minute, as a rule, depending upon the underlying blockchain. Most stablecoins reside on the Ethereum platform. 

The challenges for the widespread adoption of stablecoins include 

 compliance and regulatory uncertainty. The benefits include features such as reduced cost, improved interoperability and speed. 

USDC is a stablecoin pegged to the U.S. dollar, backed by U.S. dollars held in reserve. The white paper for the USDC stablecoin says that it was developed for beginners who want to enter the world of cryptocurrencies safely and without high costs. 

The governments of different countries often resort to a method called quantitative easing, or QE, which implies the issuance of a new supply of money by central banks globally. Acting in this way, they take politically motivated measures to reach certain goals and save certain beneficiaries from collapse, which would harm the economy. QE can, however, cause a range of undesirable consequences, such as inflation or deflation, as well as create favorable conditions for the crypto revolution that’s currently forming the global financial landscape. 

All these changes are actively supported by tech-savvy users, throughout the world, who have become active participants of the cryptocurrency ecosystem. However, there’s still much to do regarding the widespread adoption of this technology. People who are interested in cryptocurrencies may still prefer using traditional money systems, due to security concerns. Factors keeping them away from cryptocurrencies include: 

1. Sophisticated systems employed by different blockchains

The UI and functionalities offered by cryptocurrencies are usually so complicated that only technically skilled customers know how to operate with them. USDC was designed to facilitate the onboarding process.

2. The volatility of the cryptocurrency market 

Cryptocurrencies exhibit excessive volatility, and sudden changes in the price of an asset may be off-putting. Therefore, stablecoins attract beginners looking for a reliable store of value. This is a way to avoid the inherent price volatility of cryptocurrencies, as the essence of a stablecoin is to be an equivalent of fiat currency. As for USDC, its value is equivalent to one U.S. dollar, and its price is kept stable. 

The Centre Consortium introduced the USDC stablecoin as a means of trying to solve these issues and to remove obstacles on the way to widespread cryptocurrency adoption. 

In September 2018, Circle announced the release of a fiat-backed stablecoin, USDC. Previously, Gemini and 

 had already announced stablecoins developed by their platforms. Circle designed USD Coin in cooperation with BITMAIN, a leading Bitcoin hardware mining manufacturer. It’s worth noting that BITMAIN 

 conducted by Circle in May 2018. The company presented USDC as a more regulated alternative to other cryptocurrencies.

In October 2018, USDC became the first stablecoin that was listed on the then-biggest trading platform, Coinbase. Circle and Coinbase then formed a joint venture known as the Centre Consortium to develop the underlying technology of USDC and to govern it.

USDC was listed on Coinbase in October 2018, and in November 2018 Binance added it to its listing, helping to bootstrap the liquidity of the stablecoin quickly. The popularity of the USD crypto coin increased even more after it became available for trading in over 80 countries. 

This explosive growth followed amidst the reality of the coronavirus pandemic, when people started using USDC as a 

 against fiat currencies. In addition, the development of the decentralized finance (

) sector helped to drive a massive amount of traffic to USDC. Innovative features such as 

 contributed to its growing popularity. This stablecoin has become one of the leading digital assets, with amounts deposited on different DeFi platforms. By 2021, the 

 of USDC exceeded 9 billion after having 

 in 2020, which resulted in its becoming known as the fastest-growing stablecoin in the market. 

In August 2022, Bybit announced its partnership with Circle to promote the use and growth of USDC by providing users with a range of USDC products, such as 

. To make transactions even easier for its customers all over the world, Bybit allows instant auto-conversions between USD & USDC (as well as other Circle-issued stablecoins). 

As of Mar 8, 2023, the circulating supply of USDC is close to 43.5 billion. The future is likely to continue to be positive with the maturity of the infrastructure around 

In August 2020, the Centre Consortium unveiled the 

. USDC 2.0 has advanced functionality for digital wallets and other services that support stablecoins. Previously, USDC holders and holders of other Ethereum-based tokens were forced to pay a commission to process transactions. At the same time, customers must keep ETH in accounts to pay for the 

. According to the developers, this was a barrier to mass adoption. 

To remove this barrier, Centre has integrated a gasless 

 feature into USDC. This allows wallet developers to pay commissions on behalf of a client or charge fees directly in USDC tokens, rather than in ETH. The platform’s team developed a public USDC 

 to integrate the support. Developers can provide this service on their own, or a third-party service can be used to pay the associated fees.

The Centre Consortium team believes that gas-free sends will significantly expand USDC’s capabilities in payments, peer-to-peer transactions and e-commerce. The update is fully compatible with previous versions of the protocol. This means that USDC 2.0 doesn’t affect wallets, exchanges or applications that are already integrated with USDC.

 standard) enable a tokenization process that includes the following steps:

A reverse process is required when the customer wants to convert stablecoins for U.S. dollars. After sending a petition to the issuer of the USDC, the smart contract is used again for the exchange. 

USDC is an ERC-20 token that creates payment, lending, investing and trading possibilities. The ecosystem grows with the addition of other tokens and tokenization of goods and services, while the smart contract facilities become the fundamental building blocks of value exchange. The open-source framework developed by the Centre Consortium team enabled the interaction of fiat money with smart contracts, thus providing the possibility of using real-world currencies in blockchain applications. 

The USDC token is used for quick remittances and payments throughout the globe. Customers only need to have wallets and internet access to take advantage of uncensorable interoperable transactions. It’s possible to send large amounts to any location at a low fee. Since it’s a matter of minutes, this type of cryptocurrency asset is irreplaceable for holders. Apart from almost instant settlement, the benefits include round-the-clock availability, irreversibility and lower counterparty risks. 

In comparison with fiat currencies, USDC offers a wide range of uses, including higher leveraged trading and low-cost and secure transactions. The asset can also be used in the DeFi sector when buying cryptocurrency products in 

With this cryptocurrency asset, banking becomes available for the unbanked. It is often regarded as an alternative to traditional finance that brings the democratization process to the international financial system via blockchain technologies. 

Transparency of USDC is guaranteed due to their regulation and full support by U.S. institutional bodies. The issuers of USDC issuers are obliged to deliver transparency to customers. 

The stablecoins developed by Centre Consortium — USDC and Euro Coin — are issued by regulated, licensed financial institutions that maintain full reserves of the equivalent fiat currency. The USDC reserves are kept in a special bank account that is monitored and regularly audited. You can find 

The combination of cryptocurrency properties and a guarantee of USDC’s value granted by leading cryptocurrency giants (Coinbase, Circle and Bybit) contributes to the adoption of USDC in the world. 

The transparency of USDC is highly assessed by experts, especially after the reputations of Tether and Bitfinex were compromised by the investigation initiated by the New York Attorney General’s office. However, it didn’t blemish the reputation of stablecoins. On the contrary, this case emphasized the need for a legitimate and regulated stablecoin. 

Sign up for a Bybit account, or log in to your existing Bybit account to buy stablecoins via the 

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