Imagine leaving behind the volatility of cryptocurrencies while enjoying the various benefits brought by blockchain technology. This is the charm of stablecoins! By 2025, the variety of stablecoins in the market has become richer than ever, each with its unique functions and benefits.
So, who are the leading figures in the world of stablecoins?
Tether (USDT): It has become a market favorite due to its extremely high liquidity. Although it has always been a veteran player, the controversies regarding the safety of its reserves have never ceased.
USDC: If you value security and transparency, USDC may be your best choice. Its reserves are verified and detailed, earning users' trust.
Angle's USDA: This stablecoin is known for its innovative mechanism, especially its redistribution model, which is not only robust but also offers appealing returns, making it very suitable for return-seeking investors.
Angle's EURA: In the European market, this euro stablecoin is undoubtedly a star, leading in trading volume and providing users with reliable fiat trading solutions.
Dai (DAI): If you are a loyal fan of decentralization, then DAI must be your favorite.
PayPal USD (PYUSD): The stablecoin of global payment giant PayPal, attracting many users due to PayPal's own brand trust and reputation.
Of course, the options in the market go far beyond these. TrueUSD (TUSD), Ethena USDe (USDe), Frax (FRAX), and Pax Dollar (USDP) also occupy a place in the stablecoin ecosystem. Each has its strengths, from decentralization to flexibility, meeting the needs of different users.
In 2025, with such a diverse stablecoin ecosystem, how should you choose?
It's actually quite simple! Each stablecoin has its own characteristics and advantages; the key is to find the one that best fits your financial goals. If you feel a bit lost, don't worry, we have prepared a comprehensive article for you! It details what stablecoins are, how they work, and the various types available in the market.
By reading this article, you'll find that stablecoins are not just 'stable'; their importance in the cryptocurrency market is beyond imagination. Come take a look and help you find your own stablecoin!
Top Stablecoins Worth Knowing
Here are three projects that are highly regarded in the stablecoin market, each with its own characteristics, suitable for users with different needs. Whether you are a newcomer or an experienced player in cryptocurrency, these stablecoins are worth exploring!
1. Tether (USDT)
Tether (USDT) is the 'evergreen' of stablecoins and one of the most popular and widely used stablecoins in the entire cryptocurrency market. If you have traded cryptocurrencies, you have likely encountered it.
What are the highlights of USDT?
High Liquidity: USDT can be found on almost all major exchanges, whether it's Binance or Coinbase, with comprehensive trading pair support.
Versatile Use: It is the preferred choice for many traders to hedge against cryptocurrency price volatility while also occupying a place in the DeFi space.
What are the controversies surrounding USDT?
Reserve Transparency Issues: Tether has long been questioned about whether it has enough US dollar reserves to fully support the USDT it issues. Although Tether has made multiple statements, doubts still exist in the market.
Regulatory Pressure: As countries increase their regulatory scrutiny on cryptocurrencies, Tether's future may face more challenges.
Summary: Despite some controversy, USDT's high liquidity and market coverage make it a daily trading tool for many users. If you need to complete transactions or fund transfers quickly, USDT is a reliable choice.
2. USD Coin (USDC)
If you care more about the transparency and security of stablecoins, then USD Coin (USDC) may be more suitable for you. USDC has become a star product in the crypto market since its launch in 2018 due to its stability and compliance.
What are the highlights of USDC?
Completely Transparent: Each USDC token is backed by 1 dollar in reserves and is regularly audited by a third party, allowing users to clearly understand the specifics of the funds.
Widely Used: USDC has been integrated into many DeFi platforms, exchanges, and payment systems, making it a secure and convenient means of value transfer.
Strong Compliance: The developers of USDC, Circle and Coinbase, are both regulated entities, which enhances its credibility.
What are the shortcomings of USDC?
Centralized Attributes: Circle has the ability to freeze or blacklist, meaning that in some cases, users' USDC assets may be restricted from use.
Dependence on Traditional Banking System: The value of USDC relies on US dollar reserves, so it may be affected by regulatory changes or banking system disruptions.
Summary: USDC is an ideal choice for users seeking transparency, compliance, and security, with its transparency and credibility being nearly impeccable in the stablecoin market.
3. Dai (DAI)
If you have a special preference for decentralization, then Dai (DAI) is a star you cannot miss. Dai is a decentralized stablecoin created by the MakerDAO protocol, pegged to the US dollar, but does not rely on traditional fiat currency reserves; instead, it issues stablecoins using crypto assets as collateral on the blockchain.
What are the highlights of Dai?
Fully Decentralized: Dai is managed by smart contracts, with no centralized institution controlling it, and all transactions are transparent and traceable.
An Important Component of DeFi: Dai is one of the core tokens in the DeFi ecosystem, widely used in lending, yield farming, and other activities.
Community Governance: The MakerDAO community decides the direction of Dai's development through governance voting, making it more open and democratic.
What are the shortcomings of Dai?
High Volatility of Collateral: Dai's collateral mainly consists of crypto assets (like Ethereum), and the price volatility of these assets may impact Dai's stability.
Higher Complexity: Compared to centralized stablecoins, Dai's mechanism is more complex, requiring users to have a certain level of technical knowledge to fully understand and use it.
Decentralization Compromise: In recent years, more centralized assets (such as USDC) have been used as collateral for Dai, raising concerns that Dai may be losing its fully decentralized characteristics.
Summary: Dai is a stablecoin designed for decentralization enthusiasts, its unique mechanism and transparency make it a cornerstone in the DeFi world, but it requires users to have a certain level of technical understanding.
PayPal USD (PYUSD)
Who is PYUSD?
This stablecoin was launched by global payment giant PayPal in 2023, designed for users wanting efficient payments, easy transfers, and exploration of crypto trading. It is backed 1:1 by US dollar reserves, combining the strong brand trust of PayPal with the flexibility of stablecoins.
What are the advantages of PYUSD?
Reliable Brand Endorsement: As a product of PayPal, PYUSD comes with a 'trust halo', making it easier for users who are still skeptical about cryptocurrencies to accept it.
Global Influence: PayPal itself has a large user base, and the launch of PYUSD allows more mainstream users to easily enter the crypto space.
Transparent and Secure: The US dollar reserves of PYUSD are fully transparent and supervised by regulatory agencies, ensuring the safety of users' funds.
Seamless Integration: As part of the PayPal ecosystem, PYUSD can easily be used for payments, transfers, and potential DeFi applications.
What are the shortcomings of PYUSD?
Highly Centralized: PYUSD is entirely controlled by PayPal, which means accounts may be frozen or restricted, giving users less control over their assets.
Intense Market Competition: As a newer stablecoin, PYUSD faces fierce competition from established stablecoins like USDT and USDC.
Dependence on Traditional Financial Systems: PYUSD's US dollar reserves need to rely on the banking system, which may be affected by regulatory changes or banking system issues.
Summary: For those already familiar with PayPal and looking to try cryptocurrencies, PYUSD is a friendly and trustworthy entry point, but its centralized attributes may deter some crypto enthusiasts.
TrueUSD (TUSD)
Who is TUSD?
TrueUSD was launched in 2018 by TrustToken, and is one of the first compliant stablecoins. Each of its tokens is backed by US dollar reserves and is audited independently on a regular basis to ensure its transparency and reliability.
What are the advantages of TUSD?
Highly Transparent: TUSD undergoes third-party audits monthly, allowing users to trust that each token is backed by real US dollars.
Widely Accepted: TUSD is supported by many mainstream exchanges including Binance, making transactions and transfers very convenient.
Strong Compliance: As a regulated stablecoin, TUSD is protected by the traditional financial system, providing users with additional peace of mind.
What are the shortcomings of TUSD?
Centralized Issues: While transparent, TUSD remains centralized, which may not meet the needs of those seeking decentralization.
Market Competition Pressure: Compared to more mature stablecoins like USDT and USDC, TUSD's market share is smaller, and its adoption rate is relatively limited.
Dependence on Banking System: Similarly, TUSD's reserves rely on traditional banks and may face risks related to regulation or the banking system.
Summary: TUSD is a stablecoin very suitable for users seeking stability, transparency, and compliance, but it may not be the best choice for those who prioritize decentralization.
Ethena USDe (USDe)
Who is USDe?
Ethena's USDe is an innovative stablecoin that maintains its peg to the US dollar through a diversified basket of crypto assets and derivatives strategies. Its design aims to provide a stable and efficient medium of exchange for DeFi and Web3 applications.
What are the advantages of USDe?
Decentralization: USDe does not rely on the banking system or centralized institutions but manages funds through an on-chain custody system (OES), eliminating single points of failure.
Higher Resistance to Censorship: Due to its decentralized architecture, USDe is not subject to the restrictions of traditional financial institutions, making it more suitable for those concerned about their assets being controlled or frozen.
Innovative Pegging Mechanism: Compared to decentralized stablecoins like Dai, USDe does not require over-collateralization, reducing users' capital costs while improving operational efficiency.
Suitable for DeFi and Web3: USDe's design focuses on DeFi and Web3 applications, making it an ideal choice for developers and users.
What are the shortcomings of USDe?
New and not yet widely adopted: As a relatively new stablecoin, USDe still needs time to expand its user base and ecosystem.
Dependence on Complex Mechanisms: Although USDe's pegging mechanism is innovative, it may be difficult for ordinary users to understand, reducing a certain degree of user-friendliness.
Market Competition Pressure: In the face of the dominance of stablecoins like USDT and USDC, USDe needs greater market promotion and real application scenarios.
Ethereum USDe (USDe)
While Ethena USDe's design is innovative, it is not without risks. Here are some potential shortcomings:
Financing Rate Risk: The stability of USDe partly depends on derivative positions, which may be affected by fluctuations in financing rates. If negative rates persist for a long time, it may lead to a decline in the protocol's profitability, thus weakening its stability.
stETH Collateral Risk: The main collateral used by USDe is stETH (staked Ethereum), and the value of stETH may deviate from ETH itself. If this price gap widens, it may trigger liquidation risks, affecting USDe's peg mechanism.
Counterparty Risk: USDe relies on external custodians (such as Fireblocks) to manage some operations, and this reliance introduces potential counterparty risk. If these custodians encounter operational issues, it may adversely affect the operation of the protocol and the safety of user assets.
Summary: Although USDe's innovative mechanism and decentralized characteristics make it stand out in the stablecoin market, users need to be aware of the potential risks behind its complex system, especially under extreme market conditions that may affect its stability.
Frax (FRAX)
Frax (FRAX) is a decentralized stablecoin pegged to the US dollar, launched by Frax Finance. It employs a unique 'hybrid model' that combines collateral mechanisms and algorithmic adjustments to maintain stability. This flexible design allows FRAX to quickly stand out in the DeFi space, providing users with an innovative and efficient stablecoin solution.
Advantages of FRAX
Decentralized Governance:
Governance of Frax is community-led, with FRAX holders able to participate in protocol decision-making through voting. This transparent and democratic model enhances user trust while reducing the potential for manipulation.
Wide DeFi Applications:
FRAX is very active in the DeFi ecosystem and can be used for lending, liquidity provision, and yield farming services. Users can also earn passive income by staking FRAX, further enhancing its attractiveness.
Flexible and Efficient:
FRAX's hybrid model dynamically adjusts the collateral ratio based on market demand, ensuring stability while enhancing capital efficiency. This method is more economical compared to traditional over-collateralization models, reducing users' capital costs.
Disadvantages of FRAX
Centralized Risks:
Although Frax is decentralized, part of its reserves needs to rely on regulated bank accounts. This reliance on traditional financial institutions may introduce a certain degree of centralization, weakening its decentralized characteristics.
Market Volatility Risk:
FRAX has not adopted complete over-collateralization, meaning its resistance to market volatility is weaker. Under extreme market conditions, FRAX may be more likely to lose its peg to the US dollar.
Regulatory Uncertainty:
Due to part of Frax's reserves being pegged to the US dollar, it may face stricter regulatory scrutiny, increasing compliance costs and operational risks.
High Understanding Threshold:
Although FRAX's hybrid model is innovative, it may be quite complex for novice users, hindering its broader adoption in the mainstream market.
Summary: FRAX is a rising star in the DeFi world, and its innovative hybrid model brings flexibility and efficiency to the stablecoin market. However, its complexity and potential regulatory risks may deter some users.
Pax Dollar (USDP)
Pax Dollar (USDP) is another stablecoin pegged to the US dollar, issued by Paxos Trust Company. As a regulated stablecoin, USDP focuses on transparency and security, especially suitable for users with high compliance requirements.
Advantages of USDP
Fully Regulated:
USDP is a product within the US financial regulatory framework, complying strictly with relevant laws. This compliance provides additional security, attracting many mainstream users and institutional investors.
High Transparency:
Paxos conducts independent audits monthly to ensure that each USDP is sufficiently backed by US dollar reserves. This transparency gives users confidence in its stability.
Price Stability:
USDP's value is always pegged to the US dollar, providing users with a reliable tool for value storage and transfer, particularly excelling in blockchain transactions or international payments.
Disadvantages of USDP
Lack of Growth Potential:
As a stablecoin, USDP's value is always fixed at 1 US dollar, which is less attractive for investors seeking capital appreciation.
Centralized Attributes:
Since USDP is operated and managed by Paxos, it means that users have limited control over their assets. This centralized structure may not align with the pursuit of decentralization by some crypto enthusiasts.
Limited Application Scope:
Although USDP performs well in blockchain transactions, its applications in DeFi and other crypto areas are still limited compared to established stablecoins like USDT and USDC.
Summary: USDP is a highly secure and transparent stablecoin, suitable for users who focus on compliance and risk management. However, its centralized attributes and relatively limited application scenarios may limit its appeal.
What are Yield-bearing Stablecoins?
Yield-bearing stablecoins are digital assets that maintain price stability while generating returns. Unlike traditional stablecoins, yield-bearing stablecoins deposit assets into DeFi protocols to earn interest through lending, liquidity provision, or yield farming. For example, platforms like MakerDAO and Angle Protocol allow users to deposit stablecoins into the protocol to earn passive income.
Advantages of Yield-bearing Stablecoins
Dual Benefits: Holding yield-bearing stablecoins not only allows for price stability but also earns additional interest income.
Opportunities in Decentralized Finance: Through DeFi protocols, yield-bearing stablecoins provide users wishing to create wealth with blockchain technology more options.
Suitable for Long-term Holding: For those who wish to hold stablecoins long-term, yield-bearing stablecoins are an attractive choice as they can 'activate' your idle assets.
Beginner's Guide to Stablecoins: Understand Stablecoins from Scratch
If you are new to cryptocurrency, the term 'stablecoin' may sound a bit strange. But don't worry, this simple guide will help you understand what stablecoins are, their importance, how they work, and some common questions and answers.
What are Stablecoins?
In simple terms, a stablecoin is a type of 'stable cryptocurrency'. Its value is usually pegged to some real-world assets, such as the US dollar, euro, or gold. Why do this? Because ordinary cryptocurrencies (like Bitcoin and Ethereum) have too much price volatility, while stablecoins aim to maintain a stable value (usually pegged 1:1 to the US dollar), allowing people to trade and store value without worrying about sudden price changes.
Why are Stablecoins Important?
Reduce Volatility Risk:
For example, if you hold Bitcoin and the market suddenly crashes. If you quickly convert Bitcoin into stablecoins, you can avoid losses.
Convenient for Daily Transactions:
Stablecoins are more suitable for payments, cross-border transfers, or asset storage due to their price stability, unlike other cryptocurrencies that may cause concerns over sharp value fluctuations.
More Efficient Global Payments:
Through blockchain technology, stablecoins can achieve fast, low-cost international transfers, eliminating the cumbersome procedures and high fees of traditional banks.
Gateway to the DeFi World:
Stablecoins are the foundational assets of many DeFi (Decentralized Finance) platforms, allowing participation in lending, staking, and liquidity mining to earn yields.
How do stablecoins work?
The core of stablecoins is 'having stable supporting assets'. Just like how paper currency is backed by the credit of the state, stablecoins also have different collateral methods to maintain their value stability.
Fiat Currency Support:
For example, Tether (USDT) and USD Coin (USDC), which are backed by actual US dollar reserves. Simply put, the issuers deposit an equivalent amount of US dollars in the bank to ensure that each USDT or USDC has real asset support.
Cryptocurrency Support:
For instance, Dai (DAI) does not rely on US dollars but instead uses cryptocurrencies (like Ethereum) as collateral. To ensure safety, these types of stablecoins typically use an 'over-collateralization' method, such as collateralizing $150 worth of Ethereum to support $100 worth of stablecoins.
Commodity Support:
Some stablecoins, like gold-backed stablecoins, are backed by reserves of gold, silver, and other commodities.
Algorithmic Support:
This method is quite special, as it does not have actual asset collateral but uses algorithms and smart contracts to automatically adjust the supply and demand of stablecoins, maintaining price stability (e.g., TerraUSD, despite its previous failure).
What types of stablecoins are there?
Fiat Currency-backed Stablecoins
Features: Value pegged to fiat currencies like the US dollar or euro, reserves held by trusted custodians, and subject to regular audits.
Advantages: Easy to use, high transparency, price stability.
Disadvantages: Centralized management, users do not have full control.
Representatives: Tether (USDT), USD Coin (USDC).
Commodity-backed Stablecoins
Features: Pegged to commodities like gold and oil, reserves are usually held by third parties.
Advantages: More convenient to invest in commodities via tokens.
Disadvantages: Dependence on centralized institutions, transparency and auditing may be problematic.
Representative: PAX Gold (PAXG).
Cryptocurrency-backed Stablecoins
Features: Uses other cryptocurrencies as collateral, fully decentralized.
Advantages: High transparency, users can verify reserves themselves, aligning with the decentralized spirit of cryptocurrency.
Disadvantages: Requires over-collateralization, lower capital efficiency.
Representatives: Dai (DAI), Angle's USDA.
Algorithmic Stablecoin
Features: Adjusts the supply of stablecoins through algorithms, not relying on actual reserves.
Advantages: Decentralized, no need for custodial assets.
Disadvantages: Complex mechanisms, higher stability risks.
Representative: TerraUSD (although it failed, it is still a representative case of algorithmic stablecoins).
Common Questions About Stablecoins
1. Which stablecoins rank among the top by market capitalization?
The most popular stablecoins currently include:
Tether (USDT): The largest in circulation, widely used.
USD Coin (USDC): High transparency, supported by regulation.
Dai (DAI): A fully decentralized stablecoin.
PayPal USD (PYUSD): A stablecoin launched by payment giant PayPal, suitable for mainstream users.
2. Can stablecoins make money?
While stablecoins themselves do not appreciate or depreciate, you can make money in the following ways:
Staking: Deposit stablecoins into DeFi platforms to earn interest, such as annual yields of 2%-10%.
Yield Farming: Participate in liquidity mining with stablecoins to earn platform rewards.
Trading Arbitrage: Profit from price differences between different exchanges.
3. What is the best stablecoin?
There is no absolute 'best', it depends on your needs:
If you need liquidity, choose USDT.
If you value transparency and security more, choose USDC.
If you support decentralization, try Dai or USDA.
If you want to explore products that combine mainstream payments and cryptocurrency, PayPal USD (PYUSD) is worth paying attention to.
4. Where to buy stablecoins?
You can purchase through the following ways:
Centralized Exchanges: Such as Coinbase, Binance, and Kraken, allowing you to purchase with fiat after opening an account.
Decentralized Exchanges: Such as Uniswap and 1inch, exchange stablecoins with other cryptocurrencies.
Payment Methods: Some platforms allow you to purchase stablecoins directly with credit or debit cards.
Summary: Why are stablecoins the 'anchor of stability' in the crypto world?
Stablecoins combine the efficiency of cryptocurrencies with the stability of fiat currencies, making them an important part of the crypto world. Whether you want to avoid price volatility, try DeFi investments, or make quick international transfers, stablecoins provide reliable solutions.
For beginners, choosing a suitable stablecoin (like USDT or USDC) is the first step into the cryptocurrency world!
