In the early days of cryptocurrency, enthusiasts often laughed at the idea of a stablecoin pegged to fiat currencies like the US dollar. Today, the landscape has changed dramatically: Tether (USDT) captures more trade volume than most leading fiat currencies, and a wave of new stablecoins has entered the crypto-economy, widely seen as essential for the technology's future.
The Origins: JR Willett's Mastercoin Whitepaper (2012)
The concept of asset-pegged cryptocurrencies was first discussed in JR Willett's Mastercoin whitepaper in 2012, often called the 'second Bitcoin whitepaper.' By 2014, the idea gained momentum. Early attempts like Nubits (USNBT) aimed to stay pegged at $1 but lost parity after June 2016 and never recovered.
Tether: The King of Crypto-Dollars
In November 2014, Reeve Collins unveiled Tether, a blockchain-based token issued on the Omni Layer protocol. Each USDT is allegedly backed by one US dollar held in reserve, a claim that has sparked ongoing controversy. Despite skepticism, USDT has remained stable since its first price record on Coinmarketcap in February 2015. It has become a popular safe haven during bear markets, used by exchanges including Binance, Poloniex, Bitfinex, OKEx, Huobi, and many more. As of the time of the original analysis, USDT ranked ninth among all cryptocurrencies by market capitalization.
MakerDAO and Dai: Decentralized Stablecoins
Dai, built on the MakerDAO protocol on Ethereum, maintains its peg by locking up blockchain-based assets as collateral. Since its first record on Coinmarketcap on December 27, 2017, Dai has traded consistently between $0.99 and $1.02. Although less popular than USDT, Dai is actively traded on decentralized exchanges (DEXs) like Bancor, Radar Relay, and Ethfinex, and is used for borrowing and leverage due to its stable value.
TrustToken and TrueUSD: Collateralized Stability
TrueUSD (TUSD) is issued by the Trust Token Asset Tokenization Platform, with each token backed by US dollars held in segregated escrow accounts. With a market capitalization of approximately $60 million at the time of writing, TUSD has been listed on exchanges such as Zebpay, Bittrex, and Binance. Since its debut on March 6, 2018, its price has remained in the $0.99–$1.01 range.
More Stablecoins on the Horizon
A growing list of projects is entering the stablecoin space. Kowala (KUSD) has partnered with Ledger to enable hardware wallet support. Havven is developing NUSD on the EOS blockchain. Usdvault (USDVAULT) plans to collateralize its tokens with gold bullion stored in Swiss vaults. Circle Invest has also announced a US dollar-pegged stablecoin. Despite controversies surrounding trust and actual backing, stablecoins continue to gain adoption. The key question remains: can these assets maintain their 1:1 peg over the long term?