A stablecoin is a cryptocurrency that is often linked to a commodity or a currency. The most commonly used stablecoins are linked to the US dollar. However, not every stablecoin is the same. For example, they vary in degree of decentralization, risk and the underlying collateral. A reliable stablecoin is decentralized and above all stable and will therefore never vary much from the value of the linked currency or commodity. We list a few and take a look at the pros and cons of the most well-known stablecoins.
Tether (USDT)
Tether is the largest stablecoin by market capitalization. After bitcoin and ethereum, it is even the largest cryptocurrency by this measure. In the past, there were rumors that Tether was not fully backed by underlying dollars. Currently, however, Tether is one of the most transparent stablecoins and they release a detailed report every quarter detailing the underlying assets. However, the stablecoin is completely centrally controlled, which is less attractive. In addition, Tether does not generate interest by itself, but you have to stop this somewhere to generate interest. USDC has the same setup as Tether and is the second largest stablecoin after Tether.
DAI (DAI)
Both Tether and other stablecoins like USDC have an underlying asset in the form of the dollar. For example, every tether and every USDC stablecoin is backed by a real dollar. DAI stablecoin is unique in this regard. DAI is also linked to the dollar. But the difference is that DAI is a so-called crypto-backed stablecoin. That means the underlying value and security of Dai is in the form of cryptocurrencies. The underlying asset comes for the most part in the form of the aforementioned USD coin. In addition, ethereum, bitcoin and other cryptocurrencies also assure DAI of its stability. The fact that DAI’s underlying security consists entirely of cryptocurrencies, in part, makes it a decentralized stablecoin. However, the underlying value of USD Coin, as a central stablecoin, is so large that it gives a considerable central component to DAI. DAI has also shown that it can deal with volatility in the crypto market very strongly.
Pax Gold (PAXG)
Most stablecoins are linked to the dollar. Pax Gold distinguishes itself here and is linked to the price of gold. Paxos, the company behind the stablecoin, has an underlying security of 1 ounce of gold in its reserves for every PAXG token. Pax Gold is also monitored and validated by the United States government. This makes Pax Gold the best option for someone interested in investing in a stablecoin backed by a traditional commodity rather than the dollar. Because Pax Gold follows the value of gold, you speculate with this stablecoin on the value development (growth) of gold and you are exposed to any loss of value of gold after you have bought this stablecoin.
Ducata (DUCA)
The ideal stablecoin is decentralized, independent of any central entity and of Real World Assets, efficiently and passively generating income. Such an independent stablecoin is called an algorithmic stable coin.
To date, no crypto project has succeeded in making such an algorithmic stablecoin successful for the long term. Ducataa wants to change this. Ducata is a Dutch project that has developed a stablecoin that meets all the above requirements. Ducata’s stablecoin DUCA is completely decentralized, and therefore does not depend on any other asset. DUCA is designed to be stable and inflation correcting. In addition, DUCA generates passive income without the owner having to discontinue his or her DUCA. DUCA is a very groundbreaking project in that regard and literally unique in the crypto sector.
If you want to know more about DUCATA and the Dutch algorithmic stablecoin, you can do so via this page to sign up. You also have the opportunity to participate in the private sale that is currently running.