There are many different coins and each of them have their own purpose. People invest into these projects and when they think that they have accumulated enough profit they withdraw their money. But where do they draw their money?
If they keep the money in the same coin then there are chances that they lose money since it s fluctuating hence they need an out option. Somewhere where they can keep the extra money in or book their profits without chances of fluctuation. This is where stablecoins come in.
Stablecoins are those coins that have their value fixed to a specific amount. If I talk more accurately then they have their value fixed to a physical asset such as gold, dollar or any other currency.
These stablecoins are widely used by traders to buy different coins and tokens or when they are booking profits they convert their assets into stablecoins.
Below are some of the widely used stablecoins.
The coin with the highest trading volume is Tether. With an volume of almost $71B. USDT takes the number 1 spot in terms of volume. USDT has its value pinged to US dollar. USDT is currently under legal issues due to the absence of physical dollars. As it is a fiat based production coin.
Binance USD (BUSD)
Another stablecoin is BUSD. BUSD has its value fixed to the US dollar. Binance are the creators of this stablecoin. With a total 24h volume of almost $6B, BUSD takes the 4th spot in terms of trading volume.
USD Coin (USDC)
USDC is another stable coin that has its value pinged to the US dollar. According to the Center Consortium every USDC is issued by a regulated financial institution and which is backed by cash or mixed reserves of cash and bonds (similar to USDT).
Terra UST is another US dollar pegged stablecoin. UST is quite unique in its working. As compared to other stablecoins that have their stablecoins backed by cash and reserves, UST removes this need. It is an algorithm based stablecoin that has its value pegged by keeping the amount of UST and Luna in control with one another. The price is kept in control by burning more Luna or not. As a result UST doesn’t require the need for reserves as compared to other coins. UST has a total supply of 2.74B USTs.