Which Stablecoins Are the Safest? — Explained

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Which Stablecoins Are the Safest? — Explained

Article Gist: Reveal the safest crypto stablecoins in terms of data

Source: shutterstock.com/image-illustration/top-five-cryptocurrency-stablecoin-tokens-by-2139614619

Before stablecoins were created, people bought cryptocurrency using their fiat money, there was no bridge or something else that could make the transaction easier. This kind of transaction (fiat to crypto and vice versa) is more expensive and slow.

People these days are likely to trade with stablecoins pair instead of BTC pair because the bitcoin’s price is very volatile.

1. USDT (USD Tether)

This token is released by Tether, a Hong Kong-based company. USDT has the largest market cap among all stablecoins because it has more pairing than others and is also the most popular one among almost every crypto centralized exchange.

USDT Reserve:

Source: https://tether.to/en/transparency/#reports

As stated on Tether’s website, the data above is updated on March 31, 2022.

The point I want to highlight is the “Cash & Bank Deposits” reserves are just 5.81% of the overall “Cash, Cash Equivalents, Other Short-Term Deposits & Commercial Paper.” For me, Tether reserves are just too risky and not very liquid.

Note that Tether is not audited by any company or constitution

2. USDC (USD Coin)

USDC is created by Circle, a global financial technology firm based in Boston, Massachusetts. This company, Circle, works under United States remittance laws and becomes a partner of Visa to provide a fiat funding method. USDC has the second-largest market cap in stablecoins after USDT.

USDC Reserve:

Source: https://www.circle.com/en/usdc

As written from the Circle’s report on March 31, 2022, we can see that USDC reserves are completely backed by the US Dollar, which means 100% funds of the reserves are liquid or at least more liquid than any backing-up instruments.

August 2021 USDC Reserve

But don’t get it wrong, in August 2021, USDC reserves have other backing-up instruments too. I don’t have any clue what makes Circle change all the USDT reserves to the US Dollar, but it could indicate that Circle can change their USDC reserves at any time.

3. BUSD (Binance USD)

Owned by Paxos, a New York Trust Company. Keep in mind that Paxos and Binance are different companies, but even though are separated, they work together to maintain this Binance USD popularity and utility.

BUSD Reserve:

https://paxos.com/attestations/

Same as USDC, BUSD’s latest reserve report on April 29, 2022, showed us that it is 100 percent backed by the US Dollar, which means all assets held by Paxos are very liquid.

I haven’t found any instrument besides US Dollar for the BUSD reserves since its first monthly attestation report in September 2019.

For the result of the overall data, I can say that the safest stablecoins for now (or at least until this thread is published) is Binance USD by Paxos.

Can we conclude that BUSD is the best stablecoin? IMO nope, to see more potential in a more objective way, we should see many other aspects in stablecoin, like its pairing, demand, utility, and liquidity.

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Which Stablecoins Are the Safest? — Explained was originally published in The Capital on Medium, where people are continuing the conversation by highlighting and responding to this story.

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