What's in a Stablecoin? A Review of Pegged Currencies

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Anyone in the world of cryptocurrency who hasn’t been living under a rock this year won’t fail to have noticed the introduction of a series of so-called ‘stablecoins’ into the market. Stablecoins are coins that are supposed to be pegged to the rate of a stable entity, such as the US dollar, which can act as a safe harbor in times of market volatility. With so many new coins on the market, an overview is necessary to allow investors to make a more informed choice when they decide to take some time out of the markets.

Tether (USDT)

Current market cap $1.86 billion
The grandfather of stablecoins, launched in 2015. Each Tether is supposedly backed by a US dollar in a bank account, a claim that has been argued and tested many times. USDT has experienced huge volatility in its lifetime, most recently in October when rumors of insolvency erupted. It recently re-opened its web-based off-ramp after burning a huge amount of tokens which has helped recover its damaged reputation.


Current market cap $198 million
Launched in 2017, TrueUSD claims to be the “world’s first legally backed stablecoin”. It is also pegged to a real-life US Dollar and redeemable through the TUSD website. The price has also seen huge swings since its introduction, including a 30% rise in May. It saw usage spike massively in the wake of the Tether uncertainty in October and is currently the second most used stablecoin.

Paxos Standard Token (PAX)

Current market cap $182 million
With regulatory backing by the New York Department of Financial Services, Paxos clearly has the credentials to back up their claim to be a challenger to the Tether throne. Another US dollar-backed stablecoin, Paxos was made by the company behind itBit, a five-year-old crypto exchange and OTC desk, meaning they can boast excellent crypto credentials. With the strict regulations imposed on them by the state of New York, there should be no funding or banking rumors to worry about.

Dai (DAI)

Current market cap $63 million
The DAI stablecoin is made by Maker DAO, creator of the Maker token, but unlike other offerings it is not backed by a physical dollar, despite being pegged to it. Instead, the stabilization is based on, according to their whitepaper, “a dynamic system of Collateralized Debt Positions (CDPs), autonomous feedback mechanisms, and appropriately incentivized external actors.” This mechanism essentially relies on users to put up some Ethereum as collateral and receive a little less than the full USD value in DAI tokens. They can then get their ETH back when they return the same amount of DAI tokens later. It has its critics, but it has remained fairly stable at $1 since it launched in January.

Ekon (TBC)

Current market cap N/A
This Swiss-based project, not yet unleashed upon the cryptocurrency world, will see the price of each Ekon token tied to the price of one gram of 24 karat, physically backed gold. Eidoo, the company behind the scheme, raised $27.9 million during an ICO in October, but has not yet slated a release date, or a ticker, for the token. While the price of gold isn’t exactly stable, the appeal of redeeming crypto directly into actual gold may prove to be greater than its appeal as a stablecoin.

Other Players

There are other players in the stablecoin field, such as the Winklevoss twins’ GUSD, Circle’s USDC, and the Chinese Yuan-backed bitCNY, and it can be argued that diluting the market to this extent means that the likelihood of any single coin overtaking USDT is slim. It is also claimed that the volume per coin reduces when there are so many to the point where some are unusable. Each operation is a business however, and it won’t be long before those that aren’t profitable are closed down. May the best stablecoin win.