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2020 was a highly eventful year for the cryptocurrency market. However, it looks like 2021 could be the year when the crypto sector really takes off. At the moment of writing, Bitcoin is pushing new all-time highs and is trading north of $49,000. What’s more, the wider cryptocurrency market has continued the rally seen during the last few months of 2020 and January of 2021. As such, one can only imagine what the rest of 2021 could hold. Nevertheless, one asset class is somewhat overshadowed by the past weeks’ dramatic 2020 Bitcoin bull run - stablecoins. Although these crypto assets’ more stable nature can make them less attractive during bull runs, they are nonetheless effective tools to avoid volatility. Consequently, let us look at stablecoins in 2021, and some of the biggest actors in this niche.
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Stablecoins are price-stable cryptocurrencies that minimize overall volatility. The importance of stablecoins in crypto adoption simply can’t be underestimated. One of the most significant factors holding back the widespread adoption of cryptocurrencies has been its extreme volatility. Top stablecoins offer an alternative where people can dabble in cryptocurrencies without worrying about volatility. As you can imagine, stablecoins have found tremendous utility in modern cryptosystem.
So, before we delve into a list of stablecoins, let’s understand what are stablecoins and the importance of currency stability.
As we have seen time and time again, currency stability is vital for the overall well-being of the economy. For example, Venezuela is a perfect instance of a country that went through financial turmoil over the last 40 years.
Curve is a decentralized exchange (DEX) designed for efficient stablecoin trading. It is like Uniswap in that it uses liquidity pools, it’s non-custodial, and it rewards its liquidity providers. However, because Curve focuses solely on stablecoins, it costs less to use.
Stablecoins are traded directly against each other on Curve. Furthermore, that is one of the most significant differences between it and Uniswap. If you want to trade between a pair of stablecoins on Uniswap, two trades must occur:
So, as a trader, you will accrue double trading fees. And while Curve has similar benefits as Uniswap for liquidity providers, it’s not subject to the degree of “impermanent loss.” That’s because Curve only trades between stablecoins, whilst Uniswap trades directly against ETH. And ETH’s volatility can wreak havoc on...
Cryptocurrencies are frequently criticized for being volatile by many traditional traders, bankers, and media pundits. Many still tout gold as the only stable store-of-value alternative against the dollar. When considering the comparison between gold and cryptocurrencies, Vice Chairman of Berkshire Hathaway Charlie Munger views it simply. Man cannot make more gold, but he can make more Bitcoin.
Despite this misunderstanding, however, not all cryptocurrencies lack stability. Some are tied to real world assets like gold or the dollar. These cryptocurrencies are often named stablecoins due to their relative stability versus coins like Bitcoin or Ethereum.
Although, stablecoins may seem redundant at first. Their implementation allows for such innovations as a more private store and transfer of wealth, units of stable worth on decentralized exchanges,
Some stablecoins pit their value against cryptocurrencies that users have put up for collateral. Other stablecoins have a...
The Etherum ecosystem thrives off of several decentralized solutions to faults in traditional financial systems. Among such solutions, its DeFi (decentralized finance) ecosystem has become a breeding ground for innovation that exceeds the expectations of existing systems.
DeFi is the ecosystem of financial applications that operate on blockchain networks. Digital assets may be acquired through DeFi products available on these applications. Examples of DeFi products include:
Digital assets in the DeFi ecosystem may or may not represent assets in the real world. A significant proportion of the assets derive their value from the execution of smart contracts, which can mirror financial instruments in traditional markets.
Photo Source: Stably
Smart contracts provide the infrastructure for many decentralized finance technologies, allowing for the implementation of decentralized...