Stablecoins Coins list by Market Cap and Volume

So, what is stablecoin exactly, and what is the idea behind this digital currency? As you can already guess from the name itself, it is a form of crypto token that is “stable” and doesn't fluctuate much. This stability becomes possible due to the fact that stablecoins price is normally linked to a fiat currency (USD), which enables one-to-one exchanges with the actual currency.

As a result, businesses and consumers get the power to use cryptocurrency for regular payments without worrying about the value changing drastically. Plus, payments with these coins are fast, transparent, and secured on the blockchain.

When exploring the market, you will come across different types of stablecoins, each of them supported by various assets:

• Fiat-Backed. These coins are backed mainly by fiat currencies like the euro or dollar. The core essence of them is that they can maintain a stable price due to the cash reserves archived in a bank account.
• Commodity-Backed. All coins that get the backing of physical assets like real estate, gold, and any other metal fall into this category. One of the most popular stablecoins to be mentioned here is Paxos Gold.
• Crypto-Backed. Coins supported and collateralized by other cryptos like Bitcoin or Ethereum are known as crypto-backed. They are issued on blockchain networks and are programmable thanks to smart contracts.

Well, it's no secret that the main power and attractive point in old and new stablecoins is their stability. But what are some other advantages of stablecoins? Let's find it out:

• Low Volatile Assets. Just because stable assets are pegged to fiat currencies, they don\'t usually fluctuate like cryptos. This brings them in line with traditional currencies for businesses.
• Quick and Cost-Effective Payments. Payment stablecoins pave the way for fast, low-cost and cross-border transactions.
• Micropayments. The biggest stablecoins can make micropayments feasible. They allow for low-cost incremental payments and unlock massive economic activity.

Despite all their functional sides, these coins also have some “faults” and downsides to be aware of. The first concern is related to the risks coming from the absence of clear regulations in this field. Partially because of this reason, stablecoins enabled billion in crime since 2022 and this is a huge concern to take into account. The next drawback is that some coins are not as stable as they claim to be.

If they are held or retrieved by a bank or any other third party, there will be counterparty risk to consider. These entities manage the reserve assets, which can result in potential price instability or volatility and inefficient capital use.

The 2 types of stablecoins that take a bigger spot in the market are centralized and decentralized coins. The first group is issued by a central entity, as the name tells us. They are backed by reserves that are normally greater or equal compared to their tokens in circulation. Fiat-backed coins like USDC and USDT belong to this category.

The next type is decentralized coins. Here, everything is the opposite. Decentralized coins operate on smart contracts and are governed by a designated community. MakerDao's DAI is one of the perfect examples of stablecoins in this category. It is collateralized by other cryptos, such as Ethereum.

Almost all people interested in such coins for once wonder, “How are stablecoins taxed and regulated?” At the moment, no specific law or regulation is targeting just pegged coins. Even though many countries and regulators (the Securities and Exchange Commission (SEC)) have paid great attention to the field, there are no clear rules yet.

The only exception is Europe, where algorithmic pegged coins are particularly banned. On one hand, the overall lack of laws gives investors more freedom to do business. On the other hand, it can lead to an increase in risky situations similar to the “Stablecoins billion in crypto crime” case.

Originally, stable coins were utilized to buy other cryptos like Bitcoin because many exchanges didn't own access to traditional banking. Unlike country-issued currencies, stable digital currencies can be used 24/7, anywhere in the world, without relying on banks.

Another advantage of pegged coins in the crypto space is their compatibility with smart contracts on blockchains. The code dictates the terms and automates the transfer of money.

Next, stablecoins enabled in crypto the appearance of a fixed reserved currency. They can solve the problem of price swings by pegging their value to a stable reserve.

Most stable coins are linked directly to the value of a fiat currency, normally the U.S. dollar. The issuer holds a reserve of dollars and guarantees that there is one dollar in reserve for every coin issued. This setup keeps a steady price and gives trust to buyers because the issuer purchases and sells coins at $1 each.

In practice, prices of the best stablecoins may deviate slightly, about one or two percent, from their linked fiat prices. However, they avoid the extreme price swings that hinder the everyday use of cryptocurrencies. Except for dollars, pegged coins can also be tied to different assets like index fund values, commodities, etc.

Are stable coins really practical in real life, and how can you use them? Let's look through the most common use cases. Unlike volatile cryptos, stablecoins keep a consistent value tied to the asset they're pegged to. This stability is proof of their reliability for storing value.

In cryptocurrency trading, pegged coins serve as strong trading pairs. They help maintain the value of transactions and provide a practical measure of a cryptocurrency's worth. Additionally, you can earn interest just by lending such coins. However, these staking services can be risky and may not be allowed in certain countries.

Have you decided to buy stable coins? Then, it's time to learn how the process takes place and what you need to do:

1. Pick the Coin. The first and most important task you have is to choose the coin you want to buy. Research the field, look through the top stablecoins by market cap, and pick your favorite.
2. Choose a Safe Crypto Exchange. Pick a crypto exchange with regulatory compliance, a strong reputation, and a history of reliability.
3. Register. Create an account on your chosen exchange by providing your name and contact information.
4. Purchase. Once your account is ready to go, top it up by buying crypto. Then, via these funds purchase the stable coins of your choice.

If we look at the top spots among the most popular and largest coins by market cap, several names are worth mentioning. The first one is Tether. It constantly takes a grand place in the top five cryptos by market cap and is pegged to the U.S. dollar at a 1:1 ratio.

Most renowned exchanges such as Binance, Coinbase and Mraken offer Tether on their platforms. Some other top-rated stablecoins cover USDC backed by Coinbase, BUSD operating on the Binance Smart Chain and Original or Origin Dollar (OUSD). Also, on the top charts, you will come across the phrase “Bitcoin dominance without stablecoins”, which means stable coins and Bitcoin are ranked individually.

To put it simply, all cryptos other than Bitcoin are altcoins. Anything except BTC, like Ethereum, Shiba or Cardano, is called an altcoin. Altcoins differ from Bitcoin by providing novel and extra capabilities, specifically by enabling access to DeFi tools. On the other hand, stablecoins are a form of digital currency tied to a fiat currency like the dollar.

The core difference between the two lies in their purpose and so, their functionality. Just because altcoins are subject to extremes in price volatility, stable coins aim to deliver some stability as a hedge. Also note that they have a fixed amount of cash reserves.

Crypto enthusiasts that try to find more info regarding stable coins and their functionality often face this question. They usually pick from four answer choices, and the popular versions include the following:

• Collateral method for stablecoins.
• Rebase method.
• Seigniorage method.
• Voting method.

The correct answer to the question is the voting method. Unlike other options, it is not used to maintain coin stability. Their stability mechanisms are achieved through collateralization, rebasing and seigniorage.

Crypto lending and staking are the main ways that will help you earn interest on stable coins. On the platforms known as DeFi and CeFi, you can easily lend crypto and gain interest on the best stablecoins. You just give your coins to the platform, and they use them to give other people safe crypto loans for a fee.

Another way to earn interest is by staking them in a protocol to help maintain the network. Users deposit their pegged coins into a specific wallet or node, which they cannot access directly. In return, they receive a portion of the network's rewards, such as voting rights. It's important to note that staking stablecoins generally offer low but guaranteed returns.