In the blockchain finance space, knowledge of growth and its timing are important. For many people, the market growth was triggered by the accumulation of funds in Bitcoin ETFs.
But few paid attention to another signal – the rise of stablecoins. While 2024 blurs the lines between traditional currencies and tokens, fiat assets are flowing into the blockchain world and need a reliable bridge. The fact that the supply of stablecoins has increased recently is a sign of the market’s health. Their presence in a wallet will be useful at any stage of working with crypto. This includes buying for the chosen currency and obtaining a loan to earning on staking and withdrawing the profits.
And so, investors are racking their brains to find the best stablecoins in which to invest. Their issuers are becoming influential players in the blockchain space, such as these three.
USDC (USDC-USD)
When leading market players start cooperating, truly remarkable projects are born. This is exactly what happened in the case of Circle and Coinbase, which launched USDC (USDC-USD). The coin has become a benchmark of reliability for other stablecoins and consistently maintains a 1:1 ratio to the US dollar.
The token began its history in 2018 on the Ethereum (ETH-USD) blockchain and eventually expanded its presence to networks such as Algorand (ALGO-USD) and Solana (SOL-USD). The unexpected danger came from the seemingly reliable Silicon Valley Bank (SVB). In 2023, the token’s value dropped to $0.87 for a short period. SVB held Circle’s reserves of about $3 billion and fell victim to the instability in the U.S. banking system. Observers often mention this event in a negative light and miss the fact that the project withstood the pressure and has proven its resilience since then.
A recent System and Organization Controls (SOC) 2 Type 2 audit confirmed the reliability of Circle’s security measures. Additional proof of confidence in the project is the commitment of key market players. Binance has converted all the assets of its Secure Asset Fund for Users (SAFU) into USDC. The project is ranked 6th in the cryptocurrency market cap rating with an indicator of $33 billion. This level is 1.6 times lower than the peak in 2022 when the token broke through the $55 billion mark. Investors continue to perceive it as one of the best stablecoins to invest in, as each day of last week witnessed transactions worth $4.5-11 billion.
First Digital USD (FDUSD-USD)
The young and ambitious stablecoin has been winning the hearts of advanced crypto users since 2023. First Digital USD (FDUSD-USD) goes beyond the standard notions of digital assets pegged to the U.S. dollar. It is a top choice regarding insurance and financial contracts without intermediaries.
First Digital Trust Ltd. is the custodian of the project’s reserve and monitors the ratio to the U.S. dollar. Cash, as well as U.S. Treasury bills (T-Bills) and overnight repurchase agreements (repos), replenish the reserve, reinforcing users’ confidence in the stability of the exchange rate. Every month, an independent audit is conducted to re-confirm the FDUSD reserve.
In 2024, FDUSD is one of the best stablecoins to invest in, as First Digital’s vision includes further breakthrough growth, in particular, thanks to the new regulatory framework for stablecoins. The token operates in 2 networks: Ethereum (ETH-USD) and Binance Chain (BNB-USD). Due to its convenience and technological capabilities, it has passed the way from $20 million to $1 billion in market capitalization in 5 months (from listing in June to December 2023). Quotations on the leading crypto exchanges and achievements in diversification have also played a role in the exponential growth of the token. This month, the project’s capitalization rose above $4.4 billion, putting FDUSD among the top 30 cryptocurrencies.
Dai (DAI-USD)
Since 2019, Dai (DAI-USD) has enabled users to hedge risks and get the most out of decentralized finance. Maker Foundation built this project in such a way that the collateral always exceeds the number of DAI tokens in circulation. The company has transferred control of the stablecoin to MakerDAO. The community is managed by a decentralized autonomous organization (DAO), which protects the project from the concentration of power in the hands of a limited circle.
Not all stablecoins have reserves in fiat currencies exclusively. DAI is a prime example, as the token uses cryptocurrencies such as Ethereum and Wrapped Bitcoin (WBTC-USD). Despite its long history dating back to 2014, the project is one of the most modern and technologically advanced on the market. Thanks to the mechanisms of the stability fee and the DAI savings rate (DSR), users can create DAI by depositing collateral into a smart contract (Vault). When the value of the collateral falls below a set level, the liquidation of the Vault and the redemption of the DAI resolve the volatility issue.
Recent months have brought DAI victories in the form of integrations into DeFi protocols and platforms. The token is already one of the best stablecoins to invest in, and it continues to improve, keeping it in the spotlight of decentralized finance projects. Improving the stability mechanism and updating the basic infrastructure of smart contracts has increased the efficiency of DAI and helped the project gain a foothold in the 3rd position among stablecoins by market cap.
On the date of publication, Julia Magas did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.