The 9 Best Stablecoins To Buy

Hedge against market volatility in 2022 by investing in these promising stablecoins.

Last Updated January 24th 2022
12 Min Read

Cryptocurrencies have gained global popularity over the past decade. However, these digital assets are notoriously volatile, reducing mainstream participation and limiting their use as a platform for the exchange of goods and services. Stablecoins overcome this obstacle effectively. 

A stablecoin is a low-volatility version of a cryptocurrency. It is a type of cryptocurrency designed to maintain a fixed value over time. The value of a stablecoin is typically pegged to a specific real currency, often the US Dollar. 

In this setup, one unit of a stablecoin equals one unit of the fiat currency. Unlike highly volatile cryptocurrencies such as Bitcoin, the price of stablecoins is not meant to fluctuate.

What Problems Do Stablecoins Solve?

Switching from crypto to fiat currency can be expensive and time-consuming. Stablecoins give investors the best of both worlds - a stable asset within the crypto space with an advantageous transactional speed. 

Because their goal is to track an asset, stablecoins are often backed by the specific assets they are pegged to. For example, the organization issuing a stablecoin typically sets up a reserve at a financial institution that holds the underlying asset. So, a stablecoin could contain $100 million in reserve and issue 100 million coins with a fixed value of $1 per coin. If a stablecoin owner wants to cash out the token, they take the real money from the reserve.

Since their inception, stablecoins have taken off. Collectively, global stablecoins have a combined market cap of more than $150 billion. Here are the nine best stablecoins to buy in 2022.

Top 9 Stablecoins to Consider in 2022:

  1. Tether (USDT)
  2. Dai (DAI)
  3. Binance USD (BUSD)
  4. TrueUSD (TUSD)
  5. USD Coin (USDC)
  6. TerraUSD (UST)
  7. Digix Gold Token (DGX)
  8. Pax Dollar (USDP)
  9. Gemini USD (GUSD)

 

1. Tether (USDT) 

Invest in Tether, the best performing and most popular stablecoin.

Tether is a blockchain-based cryptocurrency that is backed by the US dollar. This means US dollars are kept in reserves at financial institutions serving as collateral. Stablecoins, when fully backed by the dollar, have a 1:1 relationship with USD. 

Originally founded in 2014 as Realcoin, Tether sits rightfully atop the list of stablecoins as the first such coin in the world. And with a $70+ billion market cap, it is also the largest by far. First described in a white paper published in 2012, Tether is a fiat-based stablecoin. 

With the creation of Tether and other stablecoins, it became quick and easy to swap any cryptocurrency for Tether, while converting a digital token to cash would take days and cost transaction fees. This created liquidity for exchange platforms, no-cost exit strategies for investors, and added flexibility and stability to portfolios.

Additionally, Tether can be sent anywhere globally much more quickly and with lower fees than transfers at traditional banks and financial institutions. While most people would not use Bitcoin or Ether for purchases and daily transactions due to their high volatility, it makes perfect sense to use Tether.

For these reasons, it is worthwhile to consider investing in Tether. While Tether is not necessarily a long-term investment that will grow your money by itself because it stays pegged to the US dollar, there are lending platforms, exchanges, and wallets that will pay you high-interest rates to store USDT on their platform.

2. Dai (DAI) 

Diversify your crypto portfolio by investing in DAI stablecoin today.

Harnessing blockchain technology, MakerDAO has unlocked money’s versatile potential through its decentralized Dai stablecoin. Generated via the Maker protocol and backed by a surplus of collateral, Dai is soft-pegged to the US Dollar.

Holders of the Dai stablecoin can earn the Dai Savings Rate (DSR) on the Dai they hold by locking it into a smart contract. There are no fees involved, no geographic constraints, no liquidity impediments, and no minimum deposit is required to earn the DSR. Notably, users can withdraw any portion of Dai at any time.

Over the past couple of years, Dai adoption has been on the rise. The more projects that integrate Dai or the features of Dai, such as the DSR, the more people use the stablecoin and the more the Maker ecosystem grows. In addition, Dai allows developers to offer users of their own platforms the ability to transact with a stable asset, opening the door to more risk-averse participants. 

The growing developer base and Dai user base also contribute to the network effect of the Maker protocol, increasing awareness and improving the stability of the ecosystem. 

The Dai stablecoin is a critical component of the DeFi movement as a store of value, a transactional asset, a passive income generator, and a measure of collateral in Maker Vaults. Therefore, experts believe investing in DAI is worthwhile as it makes a great addition to an investment portfolio.

3. Binance USD (BUSD) 

Experts believe buying BUSD now could pay off in the future.

Paxos and Binance founded the BUSD stablecoin to create a cryptocurrency backed by the US dollar. To support this value, Paxos holds an amount of US dollars equal to the total supply of BUSD. Therefore, the price of the stablecoin fluctuates directly with the USD. 

BUSD provides a monthly audited report of reserves in compliance with stringent regulatory standards to ensure the security and safety of user assets. Furthermore, because of its stability in relation to the US dollar, BUSD empowers traders and crypto users with the ability to transact with other digital and blockchain-based assets while minimizing the risk of volatility.

Due to the nature of cryptocurrencies, users may experience volatile changes in their portfolio value. With a stablecoin like BUSD, users can hedge against market volatility. Because of its intrinsic properties as a stablecoin, BUSD has performed exceptionally well and has established itself as a leader in the cryptocurrency space. 

2021 brought about a substantial increase in crypto adoption rates globally. Thanks to the growing market interest, BUSD was adopted at unprecedented rates due to its reliability and became an asset with a $10+ billion market cap. Furthermore, as crypto innovations like DeFi and NFTs gained popularity, so has BUSD. Therefore, investing in BUSD now is likely to pay off soon. 

4. TrueUSD (TUSD)

Discover the potential of stablecoins by investing in True USD now.

TrueUSD is a USD-backed ERC20 stablecoin that is fully collateralized, legally protected, and transparently verified by third-party attestations. In addition, TrueUSD uses multiple escrow accounts to reduce counterparty risk and provide token-holders with legal protections against misappropriation. 

TrueUSD is the first asset token built on the TrustToken platform. TrustToken is a platform to create asset-backed coins that you can easily buy and sell globally. For example, gold to gold tokens or dollar to dollar tokens.

Price stability is a benefit TrueUSD offers. Price deviations between TrueUSD and USD present an opportunity for arbitrageurs. Since traders can always trade TrueUSD for the equivalent USD on TrueUSD.com, there will be an incentive to buy or sell mid-priced TrueUSD on exchanges and convert on TrueUSD.com. 

TrustToken does not charge any trading fees on its TUSD coins, which is enticing to many investors. TrustToken is not fully decentralized, however, and users are bound to the standards of the TrustToken platform. In other words, regulatory actions on the TrustToken platform will affect holders of TUSD. 

5. USD Coin (USDC) 

Consider buying USDC tokens to manage the volatility of your crypto investments.

USDC is another stablecoin pegged to the price of a US dollar. It aims to make transactions faster and cheaper than traditional payments. USDC is always redeemable on a one-to-one basis for US dollars. In 2021, more than $20 billion in USDC was minted.

The US Dollar Coin was created in a joint move by Coinbase, the hugely popular cryptocurrency exchange, and Circle, a crypto finance company based in Boston. Circle is backed by several high-profile companies, including Goldman Sachs.

Circle started in 2013 as a way to send money easily and quickly. Since then, it has expanded into cryptocurrency, raising millions in venture capital and acquiring crypto exchange Poloniex. USDC’s parent company is a registered Money Service Business in the United States. It is regulated by the Financial Crimes Enforcement Network (FinCEN), which combats money laundering.

USDC is audited by Grant Thornton, one of the top 10 accounting firms in the world. The coin also delivers unmatched fast transactions. It can take a long time to send USD to people and institutions when banks are involved. USDC offers the stability and desirability of the US Dollar with the speed of crypto transactions.

USDC allows unbanked individuals in any country in the world to hold dollar value with nothing more than a mobile phone and a digital wallet — making USDC a crucial link between traditional finance and the blockchain-powered open financial system. It is not necessary to buy an entire USDC. You can hold as little as 0.000001 worth of USDC. 

Read Also: Tether Vs USD Coin: Which Coin Should You Add To Your Portfolio Immediately?

6. TerraUSD (UST)

TerraUSD is a fast-growing stablecoin, making it a stellar investment option.

According to the TerraUSD white paper, the coin aims to remain "both price-stable and growth-driven." Terra’s native cryptocurrency, LUNA, stabilizes TerraUSD’s protocol. The way this works is straightforward. 

The Terra platform protocols incentivize users to earn extremely low-risk profits when TerraUSD's price is anything other than $1. By linking TerraUSD to the LUNA coin and allowing LUNA to be exchanged for either UST or dollars (and vice versa), more UST is created when its price rises above a dollar. Meanwhile, the UST pool starts to contract when its price is below a dollar, bringing equilibrium. 

This give-and-take keeps the price of TerraUSD stable with respect to the dollar. And it appears to be working. Although rated a bit riskier than the likes of Tether and Binance USD, InvestorsObserver still considers TerraUSD to be a low-risk coin.

7. Digix Gold Token (DGX) 

If you trust gold as an asset, consider investing in DGX stablecoin.

DGX works differently than the other coins included on this list of stablecoins. For this reason, experts consider this coin to have a higher risk rating than those previously mentioned. The site rates DGX as a medium-risk coin, meaning the price may be more volatile, but it is still not likely to be manipulated. 

The reason for DGX's increased volatility is that it is not pegged to a fiat currency. Instead, each DGX coin is redeemable for one gram of gold. This means the coin's price depends on the price of gold. Therefore, as gold's price fluctuates, so does DGX. Although this makes the currency more volatile, it is attractive to many investors who believe in the power of hard assets. 

DGX is cryptographically secure and transparent with a Proof of Provenance (PoP) Protocol. The mechanism offers unalterable and tamper-proof records. Digix offers complete visibility over digital ownership, transaction, and inventory with records on quarterly audits.

DGX also allows users to move gold across borders seamlessly. In addition, you do not have to worry about the fee associated with moving gold as the associated gas fee is minimal, and transfer is almost immediate.

Unlike other gold-backed tokens or traditional dealers, Digix is not charging any annual storage fee, making it the most economical way to own gold. 

Buying DGX could be a good idea as it makes a stellar investment asset and a solid addition to one's portfolio.

8. Pax Dollar (USDP) 

Buying PAX Dollar stablecoins can help you with easy and cheap cross-border payments.

Paxos Standard Token (PAX) is an ERC-20 token issued on the Ethereum blockchain. As a regulated stablecoin collateralized by the US dollar, it provides the user with the benefits of blockchain technology and the stability of fiat currencies.

The PAX protocol offers Instant worldwide transactions, immutability, decentralized accounting, and 24/7 transactions. On top of that, every PAX token is fully backed by the equivalent amount of US dollars, meaning it can also be redeemed for USD at any time. However, according to US Law, Paxos Standard is not a security.

PAX Standard was established in the light of the infamous Tether controversy where the stablecoin came under scrutiny for printing Tethers out of thin air during the early 2018 crypto market bull run. Paxos team noticed the opportunity and made an extra effort to be as transparent as possible. 

Paxos issues and burns its tokens using an audited smart contract, inspected by smart contract auditor Nomic Labs. Withum, one of the top US auditing companies, regularly verifies the reserves.

Paxos Standard is designed to have growing use cases. Today, its primary use case is to limit crypto asset volatility, remove friction from cross-border transactions, and become a reliable payment vehicle for crypto-assets and other blockchain assets.

In the future, Paxos expects to be used for consumer payments and the stable store of value for people outside the US, especially in countries with unstable national currencies.

9. Gemini USD (GUSD) 

Invest in Gemini USD, a promising stablecoin taking the world of crypto by storm.

GUSD is an ERC-20 stablecoin developed by the Gemini Trust Company — a New York-based trust overseen by the Department of Financial Services. GUSD is a USD-pegged stablecoin: a single Gemini Dollar is equivalent to the USD at a 1:1 ratio and offers little to no fluctuation in price. 

Each GUSD corresponds to a US dollar held by Gemini in accounts at US FDIC-insured bank accounts and money market funds holding short-term US treasury bonds and maintained at a custodian. The cash portion of these GUSD reserves may be eligible for FDIC “pass-through” insurance for Gemini customers in the event of the failure of a bank holding the US dollar deposit portion of the GUSD reserves.

Gemini holds the funds that back their crypto in a State Street bank. With the project compliant with the stringent demands of the NYDFS, the trust has to be audited by an unaffiliated third party. The initial audit was concluded by Trail of Bits, a company that does security research and penetration testing, with the report publicly listed on the Gemini official site. 

The report showed that neither the coin nor the system itself has any weaknesses that could potentially expose users’ assets to attacks. Gemini currently works with BPM, an accounting and consulting firm, for regular audits.

GUSD boasts high rates of turnover and retrieval in comparison with many other stablecoins. Users with a BlockFi Interest Account (BIA) can earn compound interest on their GUSD. For these reasons, it could be a good idea to buy GUSD.

Bottom Line

Stablecoins provide some stability lacking in most cryptocurrencies. Compared to volatile digital assets, stablecoins have limited risks. If you are planning to invest in these assets, consider buying these nine best stablecoins in 2022. 

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