1. What Is a Stablecoin?
A stablecoin is a cryptocurrency whose value is pegged 1:1 to fiat currency such as the U.S. dollar. 1 USDT ≈ $1, and 1 USDC ≈ $1.
Stablecoins act as the crypto market's base currency. Converting coins to stablecoins in a falling market can preserve value.
2. Comparing Major Stablecoins
USDT (Tether)
- The number 1 stablecoin by market cap, at $100B+.
- The most widely used, supported by all exchanges.
- Controversy over reserve transparency.
USDC (Circle)
- Complies with U.S. regulation and publishes monthly reserve audits.
- Preferred by institutions; more transparent.
- Experienced a temporary depeg during the 2023 SVB crisis.
DAI (MakerDAO)
- A decentralized stablecoin backed by cryptocurrency collateral.
- Issued by a protocol rather than a company.
- Maintains stability with a collateral ratio of 150% or more.
3. Uses for Stablecoins
- A refuge in falling markets — Switch to stablecoins when coin values decline.
- DeFi yield farming — Deposit USDT or USDC for annual interest of 3–10%.
- International transfers — Dollar transfers faster and cheaper than banks.
- Trading base currency — The quote currency in pairs such as BTC/USDT.
4. Stablecoin Risks
⚠️ Risks to Know
• Depegging — A move away from $1; for example, the 2022 UST collapse from $1 to $0.01.
• Freezing risk — USDT and USDC issuers can freeze particular wallets.
• Regulatory risk — Governments may tighten stablecoin rules.
5. AI Trading and Stablecoins
NOONOO TRADING trades Bitcoin futures using USDT. When there is no position, assets are held safely in USDT.