If you are holding a handful of U and you don't want to buy anything, but you are afraid of the risk, this article should be for you.
Stabilized Currency Market at a Glance
The stablecoin market is currently dominated by the following currencies.
・USDT
・USDC
・BUSD
・DAI
The recent collapse of LUNA and UST has raised concerns about the risks of holding stablecoins. Investing in the cryptocurrency market, holding stablecoins is not a good idea.Therefore, the basic knowledge of stable money is indispensable.The consequence of this lack of awareness can be that people who had a long position in stable money USTs are getting blown out of the water.
USDT
decentralization
Legal tender mortgage
・1 USDT : 1 USD
contexts
First launched on the Bitfinex exchange in 2015, it has maintained its position as the market leader in stablecoins
Advantages
Largest stablecoin in terms of market capitalization
It has a longer history than other large stabilized currencies.
It is widely used in major exchanges and is easy to trade.
Risks
Regulatory Risks
Tether Holdings Ltd has lent out its reserves, thus placing the reserves at potential risk.
The information provided by the company does not clearly explain the identity of the borrower, and the maturity date of the loan, the type of reserve metal and other details are not known with certainty.
If Tether's US dollar reserves are too large, it would be dangerous for the company to have enough US dollar reserves, even if it did.
The first audit report on the Reserves was completed in February 2021 by an unknown company based in the Cayman Islands, and Tether Holdings Ltd does not regularly conduct audits.
USDC
decentralization
Legal tender mortgage
・1 USDT : 1 USD
contexts
USDC was co-founded by Coinbase and Circle in 2018 and uses a traditional centralized stablecoin design.
Advantages
・USDC reserves are audited annually.
・Circle publishes a monthly statement of reserves to recognize that the
Reserve at least the same amount of USDC in circulation.
Risks
Regulatory Risks
・Stablecoin issuers and users have unequal rights.
In Article 2 of the USDC Terms of Service, although Circle promises to exchange 1 USD for 1 USD, this rule only applies to Circle partners, i.e. cryptocurrency exchanges, financial institutions, etc. For individual users, they cannot become direct users of Circle and exercise their redemption rights, but can only become customers of Circle partners, i.e. become users of exchanges. For individual users, they cannot become direct users of Circle and exercise their redemption rights, but can only become customers of Circle's partners, i.e. users of the exchange.
BUSD
decentralization
Legal tender mortgage
・1 USDT : 1 USD
contexts
BUSD is a stablecoin launched by Binance and blockchain company Paxos in 2018.
Advantages
In order to maintain the 1:1 peg, Paxos holds US dollar reserves equivalent to the total supply of BUSD.
・Binance reserves are audited by Withum, which publishes a monthly audit report.
BUSD holders can trade all BUSD pairs at zero market maker's fee.
Risks
Regulatory Risks
DAI
decentralization
I've been using various cryptocurrencies as collateral.
contexts
Created by Maker and launched in late 2017, DAI has even become the most popular decentralized stablecoin on the market!
Advantages
It runs on Ether and is independent of the traditional financial system.
Decentralized nature allows for a high degree of transparency.
Under intelligent contract management.
Risks
Regulatory Risks
There are only a few major exchanges listed, and compared to centralized stablecoins such as USDT and USDC, the trading volume and trading pairs are not much.
Since DAI can be collateralized by cryptocurrencies, cryptocurrencies are more susceptible to flash crashes than fiat currencies, thus affecting the stability of DAI.