Comprehensive Analysis of the Ten Major Stablecoins: A Guide to Types, Mechanisms, and Market Applications

Stablecoins: The Stabilising Pillar in the Cryptocurrency World In the highly volatile cryptocurrency market, stablecoins play a crucial role. As digital currencies pegged to the value of fiat currency or other assets, stablecoins provide investors with a safe haven and a medium of exchange. According to the latest data, the total market capitalisation of stablecoins has exceeded $150 billion, becoming an indispensable infrastructure in the blockchain ecosystem. This article systematically analyses the ten most influential mainstream stablecoins currently on the market, helping readers fully understand the development status and future trends of this important financial instrument. Fiat-Collateralised Stablecoins: The Dominant Force in the Market Fiat-collateralised stablecoins are currently the most mainstream type of stablecoin, dominating the market with their stable value and high liquidity. These stablecoins are issued by centralised entities, with each token backed by corresponding fiat currency reserves. Tether (USDT), as the earliest stablecoin launched, has maintained its market leadership since its introduction in 2014. USDT is pegged 1:1 to the US dollar, with reserve assets including cash, cash equivalents, and short-term treasury bonds. Despite facing questions about reserve transparency, USDT still leads significantly in trading volume and usage scope, with daily trading volumes often exceeding $50 billion. USD Coin (USDC), jointly launched by Circle and Coinbase, has gained market trust through its high transparency. USDC publishes monthly reserve audit reports from independent accounting firms, ensuring each token is backed by sufficient US dollar assets. This transparency makes USDC particularly popular among institutional investors and gradually expands its market share in the DeFi (decentralised finance) ecosystem. Binance USD (BUSD), issued in collaboration between Binance and Paxos, is regulated by the New York State Department of Financial Services. BUSD has grown rapidly due to the massive traffic on the Binance exchange, offering significant advantages in trading pairs and liquidity provision. However, recent changes in the regulatory environment have impacted its development to some extent. Cryptocurrency-Collateralised Stablecoins: The Cornerstone of Decentralised Finance These stablecoins maintain price stability through over-collateralisation of cryptocurrencies, achieving a fully decentralised operational model and becoming a core component of the DeFi ecosystem. DAI, issued by the MakerDAO protocol, is the most successful decentralised stablecoin. Users generate DAI by collateralising crypto assets such as ETH, with collateral ratios typically maintained above 150%. DAI's uniqueness lies in its complete operation through smart contracts and community governance, independent of traditional financial institutions, truly embodying the decentralised spirit of blockchain. sUSD is the native stablecoin of the Synthetix protocol, generated by collateralising SNX tokens. sUSD is primarily used for trading synthetic assets, holding an important position in the derivatives market. Its mechanism requires a collateral ratio of over 500%, ensuring system robustness. Algorithmic Stablecoins: Pursuing Pure Decentralisation Algorithmic stablecoins do not rely on traditional collateral but maintain price stability by adjusting token supply through algorithms and smart contracts, representing the cutting-edge exploration of stablecoin technology. Frax (FRAX) employs a partially collateralised algorithmic hybrid model, pioneering new approaches in stablecoin design. Part of FRAX's value is backed by USDC collateral, while part is maintained through algorithmic mechanisms. This hybrid design finds a balance between decentralisation and stability, making it the most robust performer in the algorithmic stablecoin category. USDD, launched by the Tron network, combines algorithmic mechanisms with reserve asset backing. USDD maintains stability through over-collateralisation of crypto assets like TRX, and has established the Tron DAO Reserve to manage reserve assets, providing additional safeguards for price stability. Emerging Stablecoins and Special-Purpose Stablecoins With the development of the stablecoin market, some emerging stablecoins targeting specific needs or regions have begun to gain prominence, enriching the entire ecosystem. TrueUSD (TUSD), as an early fiat-collateralised stablecoin, is known for its legal compliance and transparency. TUSD holds US dollar reserves in multiple trust accounts and regularly publishes audit reports, offering advantages in scenarios with high compliance requirements. Pax Dollar (USDP), issued by Paxos, is regulated by the New York State Department of Financial Services. USDP not only serves the cryptocurrency market but also seeks application scenarios in traditional finance, reflecting the bridging role of stablecoins connecting two worlds. Gemini Dollar (GUSD), launched by the Gemini exchange founded by the Winklevoss twins, is renowned for its strict regulatory compliance. GUSD was the first stablecoin approved by the New York State Department of Financial Services, with monthly third-party audited reserve proofs published. EURC, as a representative euro stablecoin, meets the needs of the European market and hedging against US dollar risks. With the globalisation of the cryptocurrency market, non-US dollar stablecoins are facing new growth opportunities. Application Scenarios and Future Prospects of Stablecoins Stablecoins have evolved from simple trading tools into multifunctional financial infrastructure. In cross-border payments, stablecoins can significantly reduce fees and shorten settlement times; in the DeFi ecosystem, stablecoins are foundational assets for lending, liquidity mining, and derivatives trading; in countries with high inflation, stablecoins provide residents with value preservation tools. As regulatory frameworks gradually clarify and technological innovations continue to advance, the stablecoin market will usher in more standardised and diversified development. The coexistence model of central bank digital currencies (CBDCs) and private stablecoins, technological breakthroughs in cross-chain stablecoins, and the refinement of compliance frameworks will all profoundly influence the future landscape of stablecoins. When selecting stablecoins, investors and users should comprehensively consider factors such as collateral mechanisms, transparency, liquidity, and regulatory compliance, making informed choices based on their own needs.