In the early days of cryptocurrency, the idea of a dollar-pegged stablecoin was often dismissed as antithetical to the decentralized ethos. Fast forward to today, and stablecoins like Tether (USDT) have become the lifeblood of crypto trading, with volumes surpassing those of major fiat currencies such as the USD and JPY. Over the past year, a wave of new stablecoins has entered the ecosystem, each offering different mechanisms for maintaining price stability.
Origins: From Mastercoin to Early Failures
The stablecoin concept traces back to J.R. Willett's 2012 Mastercoin white paper, often called the “second Bitcoin white paper.” In 2014, Nubits (USNBT) attempted an algorithmic peg but collapsed by 2016. Other early efforts like BitShares also struggled to sustain consistent price stability, highlighting the difficulty of trustless pegging.
Tether: The Controversial King
Launched in November 2014 by Reeve Collins, Tether (USDT) operates on the Bitcoin network via the Omni Layer protocol. Each USDT is purportedly backed 1:1 by USD reserves, though this claim has sparked intense debate. Despite the controversy, USDT has maintained its peg since first appearing on CoinMarketCap in February 2015, and is now used by major exchanges including Binance, Poloniex, Bitfinex, Huobi, and Bittrex. Its market cap places it consistently among the top ten cryptocurrencies.
MakerDAO: Decentralized Stability
Built on Ethereum, the MakerDAO protocol generates Dai through overcollateralization of crypto assets via smart contracts. Since its debut in December 2017, Dai has traded within a narrow $0.99–$1.02 range, offering superior stability without a centralized custodian. It is actively traded on decentralized exchanges like Bancor and Radar Relay, and serves as collateral for loans and leverage.
TrueUSD: A Transparent Alternative
Issued by the Trust Token platform, TrueUSD (TUSD) also claims 1:1 USD backing but distributes reserves across multiple escrow accounts for enhanced auditability. With a market valuation of $60 million, TUSD is listed on Bittrex, Binance, and Zebpay (India), and has maintained a $0.99–$1.01 peg since March 2018.
More Coins Entering the Arena
The stablecoin race is accelerating: Kowala (KUSD) partners with Ledger for hardware wallet support; NUSD is built on EOS by the Havven team; Usdvault claims gold-backed reserves stored in Swiss vaults; and Circle is developing its own dollar-pegged coin. While trust remains a central issue—users must believe issuers' collateral claims—the utility of stablecoins continues to drive adoption. The ultimate test will be whether these coins can sustain their pegs through market stress over the long term.