Stablecoin report: a comparative analysis of major crypto projects
Crypto

Stablecoin report: a comparative analysis of major crypto projects

By Stefania Stimolo - 15 Dec 2018

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The first stablecoins, including Tether USDT, were born in 2014. According to the report of Blockchain.com, to date, there are a total of 57 stablecoin projects, recording a considerable increase especially in the last 12-18 months with many new upcoming projects.

However, of these 57 stablecoins, only 23 are now operational while the remaining 34 are still in their pre-launch phase.

stablecoin report crypto projects   A necessary distinction to be made on stablecoins is the format on which they are based:

  • Off-chain collateralised stablecoins, i.e. backed by assets such as fiat currencies, one example is Tether pegged to USD, or commodities such as gold, examples include Ekon or HelloGold;
  • Algorithmic stablecoins, i.e. algorithmically coupled and therefore decentralized and independent. An example is Basis;
  • On-chain collateralised stablecoins, i.e. supported by other cryptoassets like ethereum, an example is MakerDao with its DAI coin.  

At the moment, it is not possible to define the best stablecoin project becasue there are several factors to consider that sometimes collide with each other, like the intended use, the degree of decentralisation and minimisation, compliance with regulations and, as for each crypto, the level of scalability.

In the general context, it is interesting to note the data offered on the global geographical distribution of teams dedicated to stablecoins that sees states such as the US, Britain and Switzerland in clear predominance.

It is no coincidence that the US and Switzerland are also the main jurisdictions.

With regard to financing, it is possible to define a ranking of the investors’ interest towards projects based on the funds raised for development that sees the stablecoin Basis with 133 million dollars raised at the top, followed by Terra and Jibra with 32 million dollars respectively.

stablecoin report crypto projects

The ranking changes totally if we consider the market capitalisation of these stablecoins.

In this case, Basis disappears to make room for Tether, followed by TrueUSD, Bridgecoin and DAI.

stablecoin report crypto projects

A turnover that is partly achieved by collaborations with trading platforms and exchanges, and partly by the real use cases and real projects offered by stablecoins.

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Compared to cryptocurrencies like bitcoin, stablecoins, due to the reduced price volatility, have a potential for use of one trillion dollars.

Here are the use cases for stablecoins:

means of exchange: an anchored price brings less risk for use by companies, traders and retailers.

unit of account: compared to the free and volatile crypto market, with stablecoins as a unit of account, an existing measure would be made digital without disrupting the system.

dApps: In Web 3.0 using stablecoins for decentralised applications would reduce the speculation that exists on tokens, especially for the ERC20 stablecoins.

–  store of value: to escape the bearish markets in the crypto world, using stablecoins could lighten the burden of losses, one example is after a project’s ICO phase in order to safeguard funds.  

performance evaluation: in the long term, taking a cryptocurrency as a reference point may not provide an objective overview for an evaluation of a project’s performance. Keeping the unit of measurement stable, or even anchored to the actions, would allow for better evaluation.

derivatives, loans and remittances of payments

The future of stablecoins

Stablecoins are already one step ahead in the crypto system but there are some uncertainties about their futures, although they do not seem to be so discouraging.  

The technology of the entire crypto ecosystem, even if under development, remains at low levels compared to the potential they can offer.

In the case of the future of stablecoins there are some points to consider that Blockchain.com lists in the report:

  • For issues related to technology under development and regional factors such as local regulations, there will be room in the short term for about 5-8 stablecoins.
  • The state-of-the-art algorithmic stablecoins will be launched initially with a Tether hybrid support in order to safeguard price stability.
  • Stablecoins will be uncompetitive and complementary to other crypto algorithms such as bitcoin or ethereum, becoming an infrastructure. However, they may instead become major competitors of fiat currencies on which they are based in some jurisdictions.
  • In general, stablecoins will be increasingly present on crypto-trading platforms.
  • In the short term and in some jurisdictions, the main regulatory aspects of stablecoins will increasingly comply with securities and money services laws.
  • Stablecoins will increasingly break down barriers to mass adoption of the crypto world.
  • To create long-term value margins, stablecoin creators will add the use of stable crypto-related products and services such as smart insurance.
  • Stablecoins, on some use cases, could surpass even the most famous cryptocurrencies such as bitcoin. For example, as a means of exchange or store of value.
Stefania Stimolo
Stefania Stimolo

Graduated in Marketing and Communication, Stefania is an explorer of innovative opportunities. She started out as a Sales Assistant for e-commerce, and in 2016 she began to develop a passion for the digital world, initially in the Network Marketing sector, where she discovered and became passionate about the ideals behind Bitcoin and Blockchain technology, which lead her to work as a copywriter and translator for ICO projects and blogs, and organize introductory courses.

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