Imagine leaving the volatility of cryptocurrencies behind while still enjoying the various benefits brought by blockchain technology. This is the charm of stablecoins! By 2025, the variety of stablecoins on the market has become richer than ever before, each with its unique functions and advantages.
So, who are the main characters in the stablecoin world?
Tether (USDT): It has become a market favorite due to its high liquidity. Although it has always been a veteran player, controversies regarding the safety of its reserves have never ceased.
USDC: If you value security and transparency more, USDC may be your best choice. Its reserves are verified and transparently detailed, earning users' trust.
Angle's USDA: This stablecoin is renowned for its innovative mechanism, particularly its redistribution model, which is not only robust but also provides attractive yields, making it very suitable for yield-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, DAI must be your favorite.
PayPal USD (PYUSD): The stablecoin of global payment giant PayPal, attracting many users with PayPal's brand trust and reputation.
Of course, the choices on the market go far beyond this. TrueUSD (TUSD), Ethena USDe (USDe), Frax (FRAX), and Pax Dollar (USDP) also hold a place in the stablecoin ecosystem. They each have their strengths, from decentralization to flexibility, catering to different user needs.
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 will find that stablecoins are not just 'stable'; their importance in the cryptocurrency market is beyond imagination. Come and take a look to help you find your own stablecoin!
List of Top Stablecoins Worth Knowing
Here are three projects that are highly regarded in the stablecoin market, each with its own features, suitable for users with different needs. Whether you are a cryptocurrency novice or an old player, these stablecoins are worth exploring!
1. Tether (USDT)
Tether (USDT) is a 'evergreen' in the stablecoin world and is also one of the most popular and widely used stablecoins in the entire cryptocurrency market. If you've traded cryptocurrencies, you've likely encountered it.
What are the highlights of USDT?
High Liquidity: USDT can be found on almost all major exchanges, whether Binance or Coinbase, with comprehensive trading pair support.
Diverse Uses: It is the preferred choice for many traders hedging against cryptocurrency price volatility, while also occupying a place in the DeFi (Decentralized Finance) space.
What are the controversies surrounding USDT?
Reserve Transparency Issues: Tether has always been questioned about whether it has enough dollar reserves to fully support the USDT it issues. Despite multiple statements from Tether, doubts remain in the market.
Regulatory Pressure: As countries increase their regulatory efforts on cryptocurrencies, Tether's future may face more challenges.
Summary: Despite certain controversies, USDT's high liquidity and market coverage make it a daily trading tool for many users. If you need to complete transactions or transfers quickly, USDT is a reliable choice.
2. USD Coin (USDC)
If you care more about the transparency and security of stablecoins, USD Coin (USDC) may be more suitable for you. Developed jointly by Circle and Coinbase, 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?
Fully 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 their 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, increasing its credibility.
What are the shortcomings of USDC?
Centralized Attributes: Circle has the ability to freeze or blacklist, meaning that in certain situations, users' USDC assets may be restricted.
Dependence on Traditional Banking System: The value of USDC relies on dollar reserves, thus it may be affected by regulatory changes or disruptions in the banking system.
Summary: USDC is an ideal choice for users seeking transparency, compliance, and security, with its transparency and credibility being almost impeccable in the stablecoin market.
3. Dai (DAI)
If you have a special preference for decentralization, then Dai (DAI) is a star you can't 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 issuing through crypto assets as collateral on the blockchain.
What are the Highlights of DAI?
Fully Decentralized: Dai is managed by smart contracts, without any centralized institution controlling it, 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 activities like lending and yield farming.
Community Governance: The MakerDAO community decides the development direction of Dai through governance votes, making it more open and democratic.
What are the shortcomings of DAI?
High Volatility of Collateral: Dai's collateral primarily consists of crypto assets (such as Ethereum), and price fluctuations 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 (like 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 pillar in the DeFi world, but it requires users to have a certain level of technical understanding.
PayPal USD (PYUSD)
Who is PYUSD?
This is a stablecoin launched by global payment giant PayPal in 2023, specifically designed for users who want efficient payments, easy transfers, and to explore crypto trading. It is supported by dollar reserves at a 1:1 ratio, combining PayPal's strong brand trust with the flexibility of stablecoins.
What are the advantages of PYUSD?
Reliable Brand Backing: As a product of PayPal, PYUSD carries 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 dollar reserves of PYUSD are fully transparent and monitored by regulatory agencies to ensure the safety of users' funds.
Seamless Integration: As part of the PayPal ecosystem, PYUSD can be easily used for payments, transfers, and potential DeFi applications.
What are the shortcomings of PYUSD?
High Centralization: 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 System: PYUSD's dollar reserves depend on the banking system, which may be affected by regulatory changes or banking system issues.
Summary: For those who are already familiar with PayPal and want 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 is a stablecoin launched in 2018 by TrustToken, one of the first compliant stablecoins. Each of its tokens is backed by dollar reserves and is regularly audited by independent parties to ensure transparency and reliability.
What are the advantages of TUSD?
High Transparency: TUSD undergoes third-party audits monthly, allowing users to rest assured that each token is backed by real 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 extra security.
What are the shortcomings of TUSD?
Centralization Issues: Although transparent, TUSD remains centralized, which may not meet the needs of users seeking decentralization.
Market Competition Pressure: Compared to more mature stablecoins like USDT and USDC, TUSD has a smaller market share and relatively limited adoption.
Reliance on the Banking System: Similarly, TUSD's reserves depend on traditional banks, which may face regulatory or banking system-related risks.
Summary: TUSD is a stablecoin well-suited 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 derivative strategies. Its design aims to provide a stable and efficient trading medium for DeFi and Web3 applications.
What are the advantages of USDe?
Decentralized: USDe does not rely on the banking system or centralized institutions, but manages funds through on-chain custody systems (OES), eliminating single points of failure.
Higher Resistance to Censorship: Due to its decentralized architecture, USDe is not subject to restrictions from traditional financial institutions, making it more suitable for those worried 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: The design of USDe focuses on DeFi and Web3 applications, making it an ideal choice for developers and users.
What are the shortcomings of USDe?
Relatively new and not yet widespread: As a relatively new stablecoin, USDe still needs time to expand its user base and ecosystem.
Dependence on Complex Mechanisms: While USDe's pegging mechanism is innovative, it may be difficult for ordinary users to understand, reducing its user-friendliness.
Market Competition Pressure: Faced with the dominance of stablecoins like USDT and USDC, USDe needs greater market promotion and practical application scenarios.
Ethereum USDe (USDe)
Although the design of Ethena USDe is highly innovative, it is not without risks. Here are some potential shortcomings:
Financing Rate Risk: The stability of USDe partially relies on derivative positions, which may be affected by fluctuations in financing rates. If negative rates persist for a long time, it could reduce the protocol's profitability and weaken its stability.
stETH Collateral Risk: The primary collateral used by USDe is stETH (staked Ethereum), and the value of stETH may deviate from ETH itself. If this price difference widens, it may trigger liquidation risks, further affecting USDe's pegging mechanism.
Counterparty Risk: USDe relies on external custodians (such as Fireblocks) to manage part of its operations, introducing potential counterparty risk. If these custodians face operational issues, it may adversely affect the protocol's operation 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 understand 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 emerge in the DeFi space, providing users with an innovative and efficient stablecoin solution.
Advantages of FRAX
Decentralized Governance:
Frax's governance is community-driven, allowing FRAX holders to vote on protocol decisions. This transparent and democratic model enhances user trust while reducing the possibility of manipulation.
Wide DeFi Applications:
FRAX is very active in the DeFi ecosystem, used for lending, liquidity provision, and yield farming services. Users can also earn passive income through staking FRAX, further enhancing its appeal.
Flexible and Efficient:
Frax's hybrid model dynamically adjusts the collateral ratio based on market demand, ensuring stability while enhancing capital efficiency. This approach is more economical compared to traditional over-collateralization models, reducing users' capital costs.
Disadvantages of FRAX
Centralization Risks:
Although Frax is decentralized, some of its reserves rely on regulated bank accounts. This dependence on traditional financial institutions may introduce a 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:
Since some of Frax's reserves are 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 relatively complex for novice users, hindering its wider 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 emphasizes transparency and security, especially suitable for users with high compliance requirements.
Advantages of USDP
Fully Regulated:
USDP is a product under the US financial regulatory framework, strictly complying with relevant laws. This compliance provides extra security, attracting many mainstream users and institutional investors.
High Transparency:
Paxos conducts independent audits monthly to ensure that each USDP is backed by sufficient dollar reserves. This transparency gives users confidence in its stability.
Price Stability:
The value of USDP is always pegged to the US dollar, providing users with a reliable value storage and transfer tool, especially 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 dollar, which is less attractive for investors seeking capital appreciation.
Centralized Attributes:
Since USDP is operated and managed by Paxos, this means that users have limited control over their assets. This centralized structure may not align with some crypto enthusiasts' pursuit of decentralization.
Limited Application Scope:
Although USDP performs well in blockchain transactions, its applications in DeFi and other crypto fields are still relatively limited compared to established stablecoins like USDT and USDC.
Summary: USDP is a highly secure and transparent stablecoin, suitable for users focused 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 a type of digital asset that maintains 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.
Decentralized Finance Opportunities: Through DeFi protocols, yield-bearing stablecoins provide more options for those looking to leverage blockchain technology to generate wealth.
Suitable for Long-Term Holding: For those looking to hold stablecoins long-term, yield-bearing stablecoins are a very attractive option as they can 'activate' your idle assets.
Stablecoin Beginner's Guide: Learn About Stablecoins from Scratch
If you're just getting started with cryptocurrencies, the term 'stablecoin' may sound a bit unfamiliar. But don't worry, this simple guide will use easy-to-understand language to help you understand what stablecoins are, why they're important, 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 a real-world asset, such as the US dollar, euro, or gold. Why do this? Because regular 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?
Reducing Volatility Risk:
For example, if you hold Bitcoin and the market suddenly crashes. If you promptly convert Bitcoin to stablecoins, you can avoid losses.
Convenient for Daily Transactions:
Stablecoins are more suitable for payments, cross-border transfers, or storing assets due to their price stability, unlike other cryptocurrencies that may cause concerns over value volatility.
More Efficient Global Payments:
Through blockchain technology, stablecoins can achieve fast, low-cost international transfers, eliminating the cumbersome procedures and high fees associated with traditional banks.
Gateway to the DeFi World:
Stablecoins are the foundational assets for many DeFi (Decentralized Finance) platforms, allowing for participation in lending, staking, and liquidity mining to earn returns.
How do stablecoins work?
The core of stablecoins is 'having stable supporting assets'. Just like how paper money is backed by national credit, stablecoins also have different collateral mechanisms to maintain their value stability.
Fiat Currency Support:
For example, Tether (USDT) and USD Coin (USDC), which are backed by actual dollar reserves. In simple terms, the issuer deposits an equivalent amount of dollars in the bank to ensure that every USDT or USDC has real asset backing.
Cryptocurrency Support:
For example, Dai (DAI), which relies on cryptocurrencies (like Ethereum) as collateral instead of dollars. To ensure safety, these types of stablecoins usually use an 'over-collateralization' approach, such as collateralizing $150 worth of Ethereum to support $100 worth of stablecoins.
Commodity Support:
Some stablecoins, such as gold-backed stablecoins, are backed by reserves of gold, silver, and other commodities.
Algorithm Support:
This method is somewhat special, as it does not rely on actual asset collateral but instead automatically adjusts the supply and demand of stablecoins through algorithms and smart contracts to maintain price stability (such as TerraUSD, despite its failure).
What types of stablecoins are there?
Fiat-Currency-Backed Stablecoins
Characteristics: 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, stable prices.
Disadvantages: Centralized management, users do not have complete control.
Representatives: Tether (USDT), USD Coin (USDC).
Commodity-Backed Stablecoins
Characteristics: Pegged to commodities like gold and oil, with reserves usually held by third parties.
Advantages: More convenient to invest in commodities through tokens.
Disadvantages: Dependence on centralized institutions, potential issues with transparency and auditing.
Representative: PAX Gold (PAXG).
Cryptocurrency-backed Stablecoins
Characteristics: Uses other cryptocurrencies as collateral, fully decentralized.
Advantages: High transparency, users can verify reserves themselves, aligning with the decentralized spirit of cryptocurrencies.
Disadvantages: Requires over-collateralization, lower capital efficiency.
Representatives: Dai (DAI), Angle's USDA.
Algorithmic Stablecoin
Characteristics: 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 (though it failed, it remains a representative case of algorithmic stablecoins).
Common Questions About Stablecoins
1. Which are the top stablecoins by market cap?
Currently, the most popular stablecoins include:
Tether (USDT): Most circulated and widely used.
USD Coin (USDC): High transparency, supported by regulation.
Dai (DAI): Fully decentralized stablecoin.
PayPal USD (PYUSD): A stablecoin launched by payment giant PayPal, suitable for mainstream users.
2. Can stablecoins make money?
Although stablecoins themselves do not rise or fall, you can make money in the following ways:
Staking: Deposit stablecoins into DeFi platforms to earn interest, such as an annual yield rate of 2%-10%.
Yield Farming: Participate in liquidity mining with stablecoins to earn platform rewards.
Trading Arbitrage: Profiting 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 mainstream payment and crypto combined products, PayPal USD (PYUSD) is worth paying attention to.
4. Where to buy stablecoins?
You can purchase it in the following ways:
Centralized Exchanges: Such as Coinbase, Binance, Kraken, where you can buy using fiat after opening an account.
Decentralized Exchanges: such as Uniswap, 1inch, to 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 fast international transfers, stablecoins can provide reliable solutions.
For beginners, choosing a stablecoin that suits you (like USDT or USDC) is the first step into the world of cryptocurrencies!