As New York regulators get tougher on stablecoins, with a recent frontal attack on Binance’s BUSD, let’s take a look back at the top 5 stablecoins in the cryptocurrency market in February 2023.
Are stablecoins in the sights of regulators?
At the beginning of the week, we reported to you grim news for the stablecoin industry. Following pressure from New York regulators, Paxos will no longer be able to issue Binance BUSD.
Although rumors have been circulating for some time about the United States Securities and Exchange Commission’s (SEC) intentions to take on Paxos, the decision came quite suddenly and risks strongly impacting the landscape of stablecoins as we know it today.
BUSD issuances are now blocked but users can still exchange them for dollars. Nevertheless, Binance Stablecoin Capitalization Expected to Gradually Decline. Let’s see together the 5 most important stablecoins on the market in February 2023which could possibly constitute an alternative to BUSD:
The 5 most capitalized stablecoins in February 2023
👉 To go further – Stablecoin, all about this type of cryptocurrency
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5 – Frax (FRAX)
With a capitalization of approximately $1.023 billionthe FRAX from Frax Finance is the 5th largest stablecoin on the market in February 2023. It works on a somewhat particular principle called « fractionnal-algorithmic”.
Indeed, the FRAX is the first hybrid stablecoin being both provided by a collateral and by an algorithmic. In other words, the price stability of the FRAX is maintained by a guarantee in USDC but also thanks to an algorithm working in tandem with the Frax Share (FXS).
This duality offers a greater degree of security than a classic algorithmic stablecoin. The collateral pool in USDC is continually adjusted to maintain a dollar price. Thanks to a new type of autonomous contract (called AMO), the arbitration mechanism is automatically managed and the profits redistributed on the FXS token.
4 – Dai (DAI)
Capitalized at $5.1 billion, the 4th position of stablecoins on the market in 2023 is occupied by the DAI. It’s a stablecoin says “decentralized », issued by Maker DAOone of the most important decentralized finance (DeFi) protocols.
This stablecoin is fully decentralized and transparent. The parity of the DAI against the dollar is ensured by a basket of assets issued on Ethereum (ETH) and locked in smart contracts. All this is obviously verifiable by anyone by diving directly into the blockchain.
The functioning of the DAI is orchestrated by the governance of Maker DAO, composed of the holders of MKR tokens.
The DAI crypto is available on Binance
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3- Binance USD (BUSD)
With a capitalization of approximately $15.6 billion, Binance USD (BUSD) is the 3rd stablecoin on the market in February 2023. It is also the 7th most capitalized asset in the entire cryptocurrency market.
BUSD was born in September 2019 of an association between Binancethe first cryptocurrency purchase platform on the market, and Paxos Trust Companya company providing cryptocurrency services to banking institutions.
This stablecoin is centralized, that is to say that the value of its tokens is guaranteed by dollars. Concretely, for 1 BUSD issued, there is 1 dollar in Paxos reserves. Until then, the BUSD was considered as a stable and reliable financial product as being one of the only stablecoins approved by the New York State Department of Financial Services.
👉 Check out our full article about Binance BUSD
2 – USD Coin (USDC)
Capitalized approximately $41 billion, the USD Coin (USDC) ranks second among the most capitalized stablecoins and 5th position in the market cryptocurrency ranking.
Issued by a consortium called CENTER and made up of several companies, including Circle (the main one) and Coinbase, the USD Coin is also a centralized stablecoin. In other words, each USDC in circulation is notionally backed by 1 US dollar in Circle’s reserves.
USDC has grown tremendously in popularity in recent months, especially following concerns surrounding the market’s premier stablecoin, Tether’s USDT.
👉 All about USDC stablecoin from Coinbase and Circle
1 – Tether (USDT)
Unsurprisingly, this is the Tether (USDT) which ranks first among the most capitalized stablecoins on the market. With $69 billion in tokens in circulation, it also ranks third among cryptocurrencies on the market, behind Bitcoin (BTC) and Ether (ETH).
Launched in 2014, USDT is the first stablecoin of its kind. It is backed by the US dollar through the company’s guarantee Tether Limited, similarly to USDC and BUSD. In other words, the equilibrium of the price is maintained by the confidence in the company.
However, this has not always been good. Between the hidden links with the Bitfinex exchange and confessions that the guarantee has not always been around 100%investors have gradually turned to more secure solutions.
👉 To dig deeper – What is Tether (USDT) and how to buy it?
USDT crypto is available on Binance
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Journalist for Cryptoast, I strive to dissect every detail of the exciting world of cryptocurrencies and make it accessible and understandable to as many people as possible.
Lilian Aliaga
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