The term "stable currency" refers to a cryptocurrency that has its value anchored to an asset that is immutable in value. In the past, these digital tokens were mostly associated with the US dollar, bringing them to a valuation of $ 1. The main feature of stable currencies is that their price remains firm for most.
Introduction to Stablecoins
In the cryptocurrency market, where every digital token can lose ten to twenty percent of the valuation in a single day, stable currencies offer investors a place to escape from rising volatility.
to use as an investment tool, stable currencies are also used as fiat substitutions for payments in some cases. In this way, all the advantages of using a cryptocurrency are realized without the risk of volatility. This is a case of particularly attractive use for tourists or for those who transfer money abroad.
Traditional banking mechanisms typically impose massive taxes and restrictions in such scenarios. While bitcoins and other cryptocurrencies are viable alternatives, the lack of price stability is a significant deterrent for many consumers and traders.
The stable currencies also allow exchanges of cryptocurrencies to offer greater liquidity. Many exchanges do not have sufficient resources to request a license that allows them to support legal currencies. To overcome this restriction, they often implement a stable currency to offer a pseudo-cryptographic commercial alternative to the legal one.
Since there is a market for them, some stable currencies have arrived in the cryptocurrency ecosystems in recent years. While everyone offers the same ideology and sometimes even the same methodology, it is also enough simultaneously to separate them.
The following is a look at some of the industry's most important stable currencies and the way they stack against each other.
Tether, also known as Tether USDT or USD  is undoubtedly the most famous stable currency that has ever been made available to the public. The company claims that every USDT token in circulation is supported by a USD, stored in its bank account.
In particular, however, there has been much controversy regarding this particular stable currency. For one, Tether has been criticized for his close affiliation to the Bitfinex cryptocurrency exchange. Many believe that this connection could lead to cooperation between the two companies.
Also, to this day, Tether has never provided any evidence that it is actually in control of billions of dollars. To put the minds at ease, the company would hire an external company Friedmann LLP to conduct an independent audit of its fat reserves.
A month later, however, the two entities mysteriously parted without revealing any results. This did not bode well for the currency and only further increased skepticism in the cryptocurrency community.
"We confirm that the relationship with Friedman has dissolved Given the extremely detailed procedures that Friedman was undertaking for Tether's relatively simple budget, it became clear that an audit would be unattainable within a reasonable time," a Tether spokesperson explained when he was asked why the partnership had been solved.
However, in June 2018, Tether issued a transparency report in collaboration with Freeh, Sporkin & Sullivan LLP (FFS) "to review bank account documentation." The auditor was able to make a snapshot of Tether's bank account balance on June 1. According to the report published by FFS, legal representatives have confirmed that there was enough money to cover all the USDT in circulation.
Like the USDT, TrueUSD is another coin with collateral. Pegged against the US dollar, each token is valued at $ 1 and is said to be supported by fiat currency. With a market capitalization of around $ 58 million, it is very far from engaging USDT as a stable primary currency. However, it proposes some improvements over the Tether model.
First, TrueUSD is based on the parent company's token trust platform as an ERC20 token based on Ethereum . To ensure security, the creators of the currency have ensured that no single person or entity has full control over the secured funds.
This is partially done by using multiple deposit accounts in different locations to distribute the risk involved. The developers of TrueUSD can not access these funds. This allows the platform to be autonomous and reliable.
The official token website explains how the escrow service works:
"To redeem USD, you pass a KYC / AML check, you send the smart contract to the TrueUSD tokens from a registered user L & # 39 The Ethereum address, and then the guarantee bank, will send you funds, so the TrueUSD system does not touch the funds and the trust companies buy and receive your money through escrow accounts. "
In the future, the Trust's Token platform will also support stable currencies involving other currencies and physical assets. The Euro, the Bond and even the Gold are all valid assets that can be used to support cryptocurrency tokens.
Unlike the other two stable coins mentioned on this list so far, the diDao builder does not have a 1: 1 collateral against fiat currency. Instead, it uses only the US dollar to normalize the value of its token to a limited extent. Users can create Dai tokens by simply transferring a resource based on blockchain and blocking it as a guarantee. This may also be in the form of another cryptocurrency, such as Ethereum.
The platform is primarily an attempt to bring decentralization to financing. As a result, tokens can be traded, borrowed and even used as leverage. In fact, self-financing is a key component of the Maker platform and is essential for maintaining an economy around the token.
For example, people who need a loan can block a certain amount of Ethereum as a guarantee in exchange for a specific percentage of Dai tokens. Later, they can repay the borrowed amount to receive the commission-free guarantee.
Dai token white paper :
"Maker allows anyone to take advantage of their Ethereum resources to generate Dai on the Maker Platform. Once generated, Dai can be used in the same way any other cryptocurrency: it can be freely sent to others, used as payment for goods and services or maintained as long-term savings.It is important to underline that the generation of Dai also creates the components necessary for a solid decentralized margin trading platform. "
MakerDao achieves its stability by using an algorithm to dynamically calculate interest rates based on liquidity and other factors in the market. This part of the system has relegated the title of "Maker". It is also called "decentralized autonomous organization on the Ethereum blockchain".
Vault the smart Canadian-Swiss platform contract, announces to have obtained funding for the start of USDVault, the first stablecoin to 1: 1 USD supported and redeemable for ingots of & rs; LBMA gold kept in the Swiss vaults.
The company's talent includes graduates and employers such as Yale, Wharton, JP Morgan, Morgan Stanley, Goldman Sachs and Deloitte. The USDVault token is ready to be launched in the fall of 2018 with the goal of offering institutional investors and high net worth individuals a safe way to enter the cryptocurrency space.
The USDVault token is based on the Ethereum blockchain and is ERC20 compliant, with a fully controlled and transparent audit and accounting system integrated with the blockchain infrastructure.
Vault has a legal opinion that states that every USDVault token serves as a "deposit proof", giving investors the ability to redeem the $ 1 tokens or their gold equivalent.
Vault's legal advisers include Bennett Jones, Gateway Law and Argentum Law. The USDVault token can remain neutral against the price of gold and remain pegged to the US dollar 1: 1 through a sophisticated gold hedge process conducted by its trustees and financial partners.
USDVault adopts a broader and more rigorous risk management approach, including mechanisms that significantly mitigate financial and operational risks, such as uncertain political and legal environments.
Havven (HAV), an open source blockchain project that allows payments through decentralized platforms through its stablecoin, nUSD, today announced the intention to launch the blockchain EOSIO . Havven is currently working on Ethereum Mainnet and, as part of the EOSIO launch, will distribute 50% of the new HAV tokens on EOSIO to existing HAV owners on Ethereum.
Havven's partnership with EOSIO initially teased at Sydney's EOS Hackathon, represents Havven's overall effort to operate on several successful blockchain platforms.
Havven launched nUSD in June 2018 with the goal of being the first decentralized and scalable stablecoin. Havven uses a double-token model to provide stability. HAV, a collateralized token supports nUSD. HAV holders, who provide security, receive commissions generated by nerd transactions.
While there is no doubt that the cryptocurrencies are here to stay, the industry and the community of cryptocurrencies remain divided on the future of stable currencies. The arguments against them are particularly moving when it is understood that the efforts of the past to establish a stabilized encrypted economy have failed. Nubits, for example, started with the mission of offering token anchors for $ 1 each, but at the time of writing this article are traded at $ 0.145.
On the other hand, however, platforms such as MakerDao have established that there is a more practical approach to the proven and tested stable currency formula. The availability of coin-based currency and asset-based coin options also allows more people to remain inside the cryptosystem ecosystem.