Introduction

Stablecoins are cryptocurrencies designed to maintain a stable value, typically pegged 1:1 to a fiat currency like the US dollar. Unlike volatile cryptocurrencies like Bitcoin or Ethereum, stablecoins aim to provide the benefits of blockchain technology – fast transfers, programmability, global accessibility – without the price volatility.

Stablecoins have become essential infrastructure in the crypto ecosystem, used for trading, DeFi applications, remittances, and as a stable store of value during market volatility. The total stablecoin market cap exceeds $150 billion, demonstrating their critical role in crypto markets.

Types of Stablecoins

USDT (Tether)

Tether (USDT) is the largest stablecoin by market cap and the most widely traded cryptocurrency overall, with daily volume often exceeding Bitcoin. Launched in 2014, it was the first major stablecoin.

Key Facts:

• Market Cap: ~$115 billion (as of early 2025)
• Issuer: Tether Limited (owned by iFinex, also owners of Bitfinex)
• Available on: Ethereum, Tron, Solana, and many other chains
• Most popular on Tron due to low fees

Controversies:

• Lack of full reserve audits – Tether provides attestations but not full audits
• Past allegations of insufficient backing and market manipulation
• Settled with New York Attorney General for $18.5 million in 2021
• Reserve composition includes commercial paper and other assets, not just cash

USDC (USD Coin)

USD Coin (USDC) is the second-largest stablecoin and is generally considered more transparent and regulated than USDT. It's issued by Circle, a US-based company, in partnership with Coinbase.

Key Facts:

• Market Cap: ~$40 billion (as of early 2025)
• Issuer: Circle (regulated US financial services company)
• Available on: Ethereum, Solana, Polygon, Avalanche, and other chains
• Preferred by institutions and DeFi protocols

Advantages:

• Monthly reserve attestations by major accounting firms
• Reserves held in cash and short-duration US Treasuries
• Regulated as a money transmitter in the US
• Strong partnerships with traditional finance (Visa, BlackRock)

USDT vs USDC Comparison

Use Cases

• Trading: Most crypto trading pairs use stablecoins as the quote currency. Traders use stablecoins to move in and out of positions without converting to fiat.
• DeFi: Stablecoins are fundamental to DeFi protocols like Aave for lending, borrowing, and yield farming.
• Remittances: Sending stablecoins across borders is often faster and cheaper than traditional wire transfers.
• Store of Value: In countries with unstable local currencies, stablecoins offer dollar exposure without needing a US bank account.
• Payments: Some merchants and platforms accept stablecoin payments, combining crypto's efficiency with fiat's stability.

Risks

• Depegging Risk: Stablecoins can lose their $1 peg due to market panic, liquidity issues, or reserve problems. USDC briefly traded below $0.90 during the SVB bank failure in 2023.
• Counterparty Risk: Fiat-backed stablecoins require trusting that the issuer actually holds the reserves they claim.
• Regulatory Risk: Governments worldwide are developing stablecoin regulations. Future rules could impact how stablecoins operate.
• Smart Contract Risk: Stablecoins on blockchain are subject to potential smart contract vulnerabilities.
• Blacklisting: Both USDT and USDC can freeze or blacklist addresses, meaning they're not fully censorship-resistant.

How to Buy Stablecoins

Stablecoins can be purchased directly on cryptocurrency exchanges or received in exchange for fiat currency on certain platforms. Here are some recommended options:

Summary