Hello,
Tether (USDT) has been under fire by the crypto community the last days, some trust issues that involve Tether may cause some panic in crypto markets. So what is happening?
Tether is one of the big coins in crypto ecosystem and is used to take profits, to do daily trading and to hold when you are expecting a dip. You may think that you are safe with Tether being pegged to dollar but the truth is that it can all go the other way. Tether has 25 employees and over 60 billion USD that make USDT being always pegged to a dollar. Is this the truth?
Well some people think that Tether is printing USDT that they don't own in dollar as collateralized. Some institutions are becoming aware of this and they may ask Tether to prove that they own the amount of dollar they say they own. If they fail to prove, USDT may depeg from USD and come down, this would make crypto come down with it in price. So, is there any stablecoin that we can trust? Let's review some of them.
USDC
USDC is Tether main competitor, it's a coin created by Coinbase and aims to do the same as USDT, the advantage of USDC is that Coinbase sends reports to prove that they own capital in the value of their coin supply, you can check this reports online. The problem is that they use USDT as collateral aswell and if USDT crashes, USDC will have some problems in their hands also. Also like Tether, USDC is owned by a big company being completely centralized.
DAI
One of the best stablecoins you can get your hands one. DAI is completely decentralized. Anyone can mint DAI by putting their crypto in the contract, the amount of DAI you will receive will be equivalent to the amount of crypto you put in. This insures that DAI is collateralized by many users in the DeFi space, everyone who mints DAI owns a share of it making it fully decentralized and more secure. The problem is that you can put USDT in the contract, if USDT depeggs from dollar there will be some problems in here also, but DAI can recover with less work than centralized stablecoins.
Many other stablecoins are surging, be aware to do a full research one them before using it because some of them can go to zero like what happened to IRON. Algorithm stablecoins are also popular right now like Ampleforth and most recently ageUSD (Cardano's stablecoin) that promises to have an algorithm that is bullet proof and will never depegg from USD, lets see how this evolves.
As you can see Stablecoins aren't a fully safe investment and you also need to do some research before investing in one. Let us all hope that this goes well and the crypto ecosystem doesn't have problems with this. If you see the big picture the worst problems crypto had were due to centralized corporations, this should be something for all of us to think about. Decentralization always showed to be the best way to deal with problems.
Best Regards,
Cryptopeach
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