Ahead of ‘Merge’, Here Are 5 Ethereum (ETH) Based Stablecoins to Watch

In two days and 15 hours, Ethereum will transition from a proof-of-work (PoW) mechanism to an “eco-friendly” consensus mechanism, widely dubbed Ethereum Merge.

The long-awaited merger is essential because the Ethereum blockchain powers many decentralized applications (Daaps), non-fungible tokens (NFTs), metaverses, games, and stablecoins. Additionally, all stablecoins need a blockchain network to perform their tasks.

Stablecoins are blockchain-based crypto tokens backed by fiat currency for transactions. Some stablecoins are also backed by physical gold. Stablecoins need a blockchain or similar distributed ledger technology (DLT) to record transactions. However, the choice of technology depends on the issuer of stablecoins.

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For example, USDD, an algorithmic stablecoin on the TRON blockchain, does not work on the Ethereum blockchain. Nevertheless, the Ethereum blockchain is the most popular choice for stablecoins and other crypto products such as NFT, DeFi, games, metaverse, etc.

Here are the 5 best stablecoins based on the Ethereum blockchain

According to crypto news aggregator Coinmarketcap, the top five Ethereum (ETH) blockchain-based crypto stablecoins based on market capitalization as of September 12 are Tether USDT, Circle’s USDC, Binance BUSD, Maker DAO’s DAI, and Frax Finance’s FRAX.

Tether (USDT): USDT is the first stablecoin in the world, created in 2014. It was issued by the Hong Kong-based company iFinex, owner of the Bitfinex crypto exchange. Tether has $66.4 billion in assets as of June 30, 2022, according to audited statements from accounting firm BDO Italia. The current market capitalization of USDT is around $69 billion.

USDC: USDC is issued by Circle and backed by short-term US Treasury bonds. The auditing firm Grant Thornton LLP audits the documents and issues monthly certificates. USDC’s current market capitalization is approximately $51 billion. According to an August 24, 2022 Grant Thornton audit report, USDC has approximately $54 billion in assets, backed by US government cash and treasury instruments.

BUSD: BUSD is a stablecoin issued by Binance, the world’s largest crypto exchange, in partnership with New York-based crypto wallet company Paxos.

Binance revealed that BUSD is fully backed by cash and cash equivalent pools, owned and managed by Paxos and regulated by the New York State Department of Financial Services. BUSD has a market capitalization of around $20 billion.

AID: DAI is a stablecoin issued by Maker DAO, a decentralized autonomous organization. DAI is not backed by any traditional assets or US dollars. Instead, it is supported by a combination of Ethereum-based DeFi contracts, Ethereum tokens, and USDC. DAI currently has a market capitalization of approximately $6 billion.

DAO is an organization where token holders make decisions through a voting mechanism. There is no centralized control of an individual in a DAO. There is no centralized control of an individual in a DAO.

FRAX: It is an algorithmic fractional stablecoin issued by FRAX finance. FRAX is an open-source, decentralized, on-chain stablecoin on the Ethereum blockchain. It maintains its dollar peg using collateral USDC: Its native FXS crypto token uses real-time market data using its algorithm. Its current market capitalization is approximately $1.4 billion.

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Ahead of ‘Merge’, Here Are 5 Ethereum (ETH) Based Stablecoins to Watch


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