Comprehending various stable coins of the future.
Upper hand of stable coins in the crypto domain
The advancements in the cryptocurrency domain have resulted in volatility, as emerging cryptocurrencies affect the former ones. To combat these fluctuations, some kind of initiative has to be taken which indirectly resulted in an outcome of the stable coins. They tend to provide some kind of stability within the Crypto market as other cryptocurrencies fluctuate it. It has also been quite popular due to its various other advantages apart from providing stability to the market. That cryptocurrencies fluctuate by more than 20% in a single day, which makes it highly difficult for it to be considered as a store of value and hence a democratized currency.
Why do we need stable coins in the first place?
The stable coins were introduced to the cryptocurrency domain, to provide a stable cryptocurrency for more accessible storage and transfers without any risk of price slippages. It even provided a great convenience to the users, who had to forcibly convert their cryptocurrency funds into the Fiat currency and transfer it out of the exchange, in order to keep it safely, but after the advent of stable coins they are easily able to store it in their hardware Wallets, without the intervention of banks. In a nutshell, the stable coins add to the development of cryptocurrencies in completely eradicating centralized institutions from finance.
Let us unveil, some of the most popular stable coins in the Crypto market.
This particular stable coin was the pioneer in its field, and also known as USDT. The token is quite popular in the Crypto space with most of the exchanges supporting it. With millions of tokens released by the concerned authority at regular intervals, leads everyone to suspect that the respective amounts of US dollars are not being deposited as a collateral. The token value is connected with that of 1 USD, but the catch is that the organization hasn’t officially audited its reserves.
Another popular crypto coin is Digix, whose price is pegged to 1gm of Gold. This is the gold counterpart of USDT. However, as the price of gold changes, it would be reflected Digix too. Therefore, it’s not a convenient option for the people who are looking for stability concerning any Fiat. However, the gold standard has also become outdated in the various financial economy.
Initially developed by Maker DAO, this particular stable coin is backed by Ethereum, but its value is associated with that of USD. The exciting part about such crypto backed stable coins is that the backed funds itself are highly volatile. As a result, to counteract with the fluctuations, excess reserves are utilized.
This particular stable coin utilizes the Tokens as its collateral. The Haven Tokens are used by the Havven platform which manages everything. The fluctuations are balanced through the staking of the Haven tokens.
Basis and Saga
These are two of the most interesting stable coins, as no collateral backs their existence. The former one is pegged to CPI (Consumer Price Index ) and the second one with that of International Monetary Fund’s SDR (individual drawing rights).
This particular token is also collateralized by the Fiat currency pegged with 1 USD. Even this particular stable coin had to face with speculations, but the TrustToken foundation made sure that there was no room left for any kind of speculations. The foundation hired legal firms to develop a legal architecture around the stable coin. The facility had an automated escrow account, which was periodically audited ensure transparency with its users.
Gemini dollar (USDG)
This particular stable coin is a head to head competitor to USDT. Developed initially by the Gemini Trust, the stable coin was recently announced to be centralized in nature and all the funds concerning Gemini dollar could be nullified completely.
Future of stable coins
Many other US-based companies are on the verge of developing their stable coin amidst the Crypto chaos. is it it is pronounced that is table coin have their own set of pros and cons concerning the fluctuations in the market. The future of the stable coins is highly stable, as they reduce the volatility of the cryptos.