The crypto market is known for its volatility, but stablecoins aim to provide stability amidst the fluctuations. As stablecoins gain popularity, investors need to understand what is the safest stablecoin. We dive into the key aspects determining a stablecoin’s safety and explore the top options for 2024.
Summary
Based on our detailed analysis, the 5 leading stablecoins are USDC, USDT, DAI, BUSD and TUSD. Each one stands out based on attributes around transparency, adoption, decentralization and compliance.
- USD Coin (USDC) – Uniquely transparent with regular attestations and audits of its cash reserves. Highest regulatory compliance.
- Tether (USDT) – Largest stablecoin by market cap. Widely adopted for trading and transactions.
- Dai (DAI) – Only major decentralized stablecoin option. Crypto-collateralized.
- Binance USD (BUSD) – Popular on Binance Smart Chain. Regulated in New York.
- TrueUSD (TUSD) – Emphasizes regulatory compliance and independent verification of reserves. Has avoided major legal/economic issues.
What is a Stablecoin?
A stablecoin is a cryptocurrency that aims to provide price stability by pegging its value to an external asset. The external value can be fiat money like the US dollar, other cryptocurrencies, commodities like precious metals, or algorithms.
Stablecoins emerged to address the extreme volatility of popular cryptocurrencies like Bitcoin and Ethereum. They allow individuals and organizations to leverage the advantages of cryptocurrencies while avoiding massive value fluctuations.
Overview of What is the Safest Stablecoin in 2024
With increasing stablecoin options, investors must identify the most secure and reliable choices. We analyzed the top stablecoins across essential safety parameters to determine the best stablecoins for 2024.
USD Coin (USDC)
USDC is the safest stablecoin overall for 2024. Developed collaboratively by Circle and Coinbase, it maintains its 1:1 peg to the US dollar through complete backing by cash reserves and short-term US Treasuries.
The company publishes attestation reports monthly and undergoes annual audits to prove its reserves transparently. This level of transparency is unmatched among stablecoins.
USDC operates within the rigorous regulatory framework of New York State. Its unparalleled transparency and compliance make it a trusted stablecoin choice for both CeFi and DeFi ecosystems. As USDC is an ERC-20 token built on Ethereum, you can easily add USDC to MetaMask wallet to start transacting and interacting with USDC-based Dapps.
Key Metrics
- Market Cap – $53 Billion
- 24H Volume – $48.85 Million
- Circulating Supply – 27.53 Billion
- Collateral Asset – USD (Cash and US Treasuries)
- Audit Frequency – Monthly
- Return over 1 Year – 102%
- Rank by Market Cap – #7
- Launch Date – September 2018
- Founders – Circle and Coinbase
- Blockchain Networks – Originally Ethereum, now multi-chain
Tether (USDT)
As the largest stablecoin by market capitalization, Tether (USDT) remains a relatively safe stablecoin bet for 2024. It maintains close parity with the US dollar.
However, USDT has faced questions regarding its dollar reserves and faced legal issues over fraud allegations. Its commitment to transparency lags behind USDC.
But with rising adoption across exchanges and extensive circulation, USDT retains its position among the more secure stablecoin options on the market.
Key Metrics
- Market Cap – $96.19 Billion
- 24H Volume – $303.59 Million
- Circulating Supply – 96.19 Billion
- Collateral Asset – USD (and commercial paper)
- Audit Frequency – Quarterly
- Return over 1 Year – 2%
- Rank by Market Cap – #3
- Launch Date – 2014
- Founders – Brock Pierce, Craig Sellars, and Reeve Collins
- Blockchain Networks – Originally Bitcoin, now multi-chain
Dai (DAI)
For those preferring decentralized stablecoins, Dai (DAI) stands out as the safest option backed by crypto assets. Issued via the Maker Protocol, it maintains its soft peg through over-collateralization and algorithmic supply adjustments.
A shift towards decentralized backing assets like WETH improves its autonomy and stability compared to alternatives relying on centralized collateral like USDC. As Dai is natively built on Ethereum’s blockchain infrastructure, integrating it with your MetaMask wallet is seamless. Add Dai to MetaMask to bring the stability and utility of this stablecoin into your crypto portfolio.
Key Metrics
- Market Cap – $4.87 Billion
- 24H Volume – $725,010
- Circulating Supply – 4.87 Billion
- Collateral Asset – Crypto (WETH, wstETH)
- Audit Frequency – Real-time
- Return over 1 Year – -20%
- Rank by Market Cap – #21
- Launch Date – 2017
- Founders – MakerDAO
- Blockchain Network – Ethereum
Binance USD (BUSD)
BUSD is a stablecoin launched in 2019 by Binance in partnership with Paxos. It is approved and regulated by the New York State Department of Financial Services. BUSD is pegged 1:1 to the US dollar and fully backed by USD reserves held in bank accounts.
It is built as an ERC-20 token on the Ethereum blockchain, and also supports the BEP-2 standard. BUSD has a $18.82 billion market capitalization, ranking it among the top 5 most valuable stablecoins. It is popular for transactions on the Binance Smart Chain as well as for crypto spot trading and peer-to-peer transactions. BUSD is seen as a key part of Binance’s future ecosystem and crypto adoption plans going forward.
Key Metrics:
- Market Cap – $84.69 Million
- 24H Volume – $15.51 Million
- Circulating Supply – 84.51 Million
- Max Supply – No max
- Collateral Asset – USD
- Peg Ratio – 1:1 to US Dollar
- Launch Date – September 2019
- Founders – Binance and Paxos
- Blockchains – Ethereum, BNB Chain, Polygon, Avalanche
- Rank by Market Cap – #369
TrueUSD (TUSD)
TUSD is a regulated stablecoin launched in 2018 by TrustToken, backed 1:1 by US dollar reserves. TUSD has a market capitalization of $1.2 billion and is currently ranked the #42 crypto asset. It aims to improve crypto market liquidity as well as provide asset storage and transfer solutions.
TUSD emphasizes regulatory compliance, security, and independent verifications of its reserves. It has not faced any major legal or economic issues, unlike some alternatives. As a result, TUSD is considered a very safe stablecoin option due to TrustToken’s stringent focus on policies and processes.
Key Metrics:
- Market Cap – $1.46 Billion
- 24H Volume – $88.38 Million
- Circulating Supply – 1.5 Billion
- Collateral Asset – USD
- Peg Ratio – 1:1 to US Dollar
- Launch Date – March 2018
- Founder – TrustToken
- Blockchain – Ethereum
- Rank by Market Cap – #55
- Daily Return – 0.02%
Conclusion
As stablecoins see greater real-world use cases, USDC, USDT, and DAI lead the market as the safest options available. USDC takes the top spot with its robust transparency practices, regulatory compliance, and backing by cash reserves.
For those seeking alternatives, USDT and DAI offer viable options with relatively lower risks compared to other stablecoins. As market dynamics evolve, investors should continuously assess measures that determine the safety benchmarks of stablecoins.
FAQs
Which stablecoin is the largest by market capitalization?
The largest stablecoin is Tether (USDT), which has a market capitalization of over $66 billion.
How often does USDC publish attestation reports?
USDC publishes attestation reports on a monthly basis to transparently disclose the cash reserves and US Treasuries backing the stablecoin 1:1 with the US Dollar.
What backing assets support DAI?
Dai moved away from single-asset collateral to a multi-collateral backing system comprising majority decentralized assets like WETH and WSTETH rather than centralized dollars or equivalents. This improves its autonomy and resistance to centralized risks.
Which stablecoin is considered the most transparent?
USD Coin (USDC) leads stablecoins in transparency practices via monthly attestations and annual audits revealing its backing by cash and short-term US Treasuries. This level of transparency through regular disclosures builds greater trust in its operations.
