It is the only stablecoin that investors should use

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We all know that cryptocurrencies can be volatile, which makes features like stablecoins extremely useful in providing quick volatility protection. Stablecoins play a unique but practical role in the cryptocurrency economy and have become popular over the years.

Given their wide applicability, it is imperative that stablecoins are reliable and, of course, stable. The collapse of the algorithmic stablecoin Terra in May showed how important it is. This disaster highlighted the need for stablecoins to operate transparently so that investors and users can find solace in a situation like Earth. [zdaj Terra Classic (LUNC)]don’t repeat it.

Now that Terra has almost completely lost investor credibility, stablecoin users have mainly focused on two alternatives: Tether (USDT) and USD Coin (USDC).

Annex Teave

Tether has long been the largest stablecoin issuer among all cryptocurrencies. As of July 2018, its market cap was in the top 10 of all cryptocurrencies. Since then, its market cap has increased by 3,500% and is arguably the most popular stablecoin on the market. However, the ascent to the top was not easy.

In theory, stablecoin traders should act like a bank. You must have enough money to be able to pay any user who wishes to redeem their stablecoin shares. Maintaining this balance between distributed stablecoins and reserve funds ensures that stablecoins remain anchored.

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In recent years, Tether has become a familiar face in courtrooms due to growing skepticism that its reserves are not worth equivalent to the number of stablecoins distributed. Three lawsuits have been filed so far and fines totaling more than $ 10 million have been imposed. To correct this bad press, Tether offered the public a third-party audit in July 2021, but has not yet done so.

The clearest choice

Meanwhile, the other most popular stablecoin, USD Coin or USDC, has taken a different approach to its business. The fintech firm behind USDC, Circle, did not operate in the shadows and adopted an attitude of openness and transparency. The USDC budget is published annually. An additional monthly statement contains information on the amount of the reserve to ensure that it matches the amount of USDC distributed.

Despite the sharp decline in cryptocurrency prices in 2022 and the instability exacerbated by the failure of cryptocurrency platforms such as Voyager and Celsius, USDC’s market capitalization has increased thanks to the search for more reliable options by stable investors. . The USDC has risen nearly 15% since Terra filed for bankruptcy in May. Today it is the second most profitable stablecoin in the world and the third most profitable cryptocurrency by market capitalization, with a value of approximately $ 55 billion. Over the same period, Tether’s market value fell more than 20%, but it still holds the position as the largest stablecoin with a market value of around $ 66 billion. At one point in the year, the difference between the two capitalizations was $ 40 billion. USDC is on the heels of Tether and could surpass it if current trends continue.

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The past few months have been far from stable for the cryptocurrency economy. Hedge funds have gone bankrupt, lending platforms have gone bankrupt, and some cryptocurrencies are now almost entirely worthless. Osveujoe resembles a company like Circle, renowned for its transparency and trust. Because that’s what cryptocurrencies are for. Instead of risking Tether and a potential Earth-like catastrophe, investors should consider allocating their stablecoin holdings to a safer and more transparent option like USDC.

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