Terra protocol’s native stablecoin has overtaken the DAI stablecoin to become the world’s fourth-largest stablecoin by market capitalization.
After months of price tracking and close marking, US dollar-pegged USD stablecoin has come ahead of Marker’s similarly US dollar-backed DAI. Terra’s USD now has a market capitalization of over $9 billion.
What Are Stablecoins?
Stablecoins are cryptocurrencies whose intrinsic values are not determined by the organization that issues them but rather by the real-life fiat currencies or valuables they are linked to. Unlike other available cryptocurrencies, they offer more stability and resourcefulness since price flunctuations might not affect their value.
Bitcoin might be the only exception to the rule. While stablecoins might experience varying price values and might even see price plummet, the fact that it is pegged to a real-life commodity or institution offers a type of peace of mind to investors.
Stablecoins In The Cryptocurrency Space
As established earlier, USD is now the fourth most valued stablecoin, meaning that it has predecessors on the ranking list.
Binance, the world’s leading crypto exchange platform, has its native token BUSD, comfortably in the third position as the third most valuable stablecoin globally. It leads the new fourth-place entrant by a margin of over $5 billion in market capitalization.
The BUSD is backed by the greenback, an act that allows the US Treasury to issue legal tender. Although not confirmed by the exchange, the stablecoin is supposedly paired to the US dollar in a singular ratio, and Paxos, a crypto firm, secure the liquid funds.
The second most valued stablecoin is the US dollar-backed USDC with a massive market capitalization of $41.9 billion. The stablecoin, though it is a decentralized token, is run by the centralized firm, Circle.
Circle is the cryptocurrency company that is responsible for the issuance of USDC. They are a centralized financial institution that is the guardian of several other crypto-assets globally.
The USDC is reportedly backed by other centralized, traditional financial instruments like corporate bonds, legal tenders, and others.
The First on the list and the most valuable stablecoin USDT is Tether’s brainchild. It commands a market capitalization of $77.1 billion, sitting comfortably at the top spot in the stablecoin utility race. Tether Limited, a subsidiary of Bitfinex exchange, is responsible for issuing the stablecoin.
Tether’s USDT is also a decentralized stablecoin that backs centralized institutions and financial instruments. It is pegged mainly to the US dollar.
Terra’s USD and Marker’s Dai are the only exceptions to the decentralized protocols leveraging centralized entities scenario in the stablecoin space.
They are decentralized stablecoins that are pegged to their decentralized cryptocurrency counterparts. It ensures further stability and increased security of background assets that facilitates the linkage of the stablecoins to the relevant financial institution.
Terra is a layer one Blockchain network that features smart contracts and is the fourth biggest layer one network that fields smart contracts. It is only led by Cardano, Solano, and Ethereum to increase relevance.