Stable coins are coins whose price is stable depending on what are they backed by. Lets say a stable coin is backed 1:1 ratio with a US Dollar, that would mean that You will always get 1 US dollar for the coin.
Why would anyone need stable coins?
- Makes it easier to trade in exchanges. For example You can trade Bitcoin into stable coin - and then that stable coin into Ethereum.
- Putting profits into stable coins - prevents You from losing money to the volatility of the non stable crypto currencies.
- Eliminates necessity to cash out from the exchange in order to keep Your money safe.
- Makes it easier to follow Your taxes.
- Lending/staking with less risk.
- Buying stable coins in most cases is Fee-less as well as trading from stable coin is cheaper than from FIAT.
Where do I use stable coin?
I'm using stable on two exchanges I'm currently actively using. One is KuCoin which I use to get access to bigger selection of coins.
And also using the auto-lending function to lend my crypto for 7 days to people who are willing to borrow for a decent % of APY.
I only do the 7 day lending so that my profits from the 7 day goes into my next 7 day investment.
I also do staking on crypto.com You can choose for how long would You like to stake it, the longer You stake, the better the return rate.
There are so many stable coins right now, it would be hard to count. Most popular ones are the stable coins that use USD as collateral.
There are few that uses other FIAT currencies, like EUR, some uses gold, others even uses crypto currencies as collateral. Anyway - the biggest ones would be these:
1. USDT - Tether biggest stable coin which was audited by moore.ky and proved to have every dollar covered. Most of the collateral USD are invested. But they do have enough to cover all minted supply. Current Market Cap is $77.98B according to Cryptobubbles.net As most stable coins this one belongs to one of leading trading exchanges Bitfinex. and is ranked as 4th currency by Market Cap.
2. USDC - USD Coin is second biggest stable coin provided to us by Coinbase.com according to Reports by Grant Thornton LLP USDC is backed as Coinbase.com have promised. Current Market Cap is $42.12B according to Cryptobubbles.net and is ranked as 9th currency by Market Cap.
3. BUSD - Binance USD is the third biggest stable coin which belongs to binance.com and paxos . BUSD is regulated by New York State Department of Financial Services. Current Market Cap is $14.62B according to Cryptobubbles.net and is ranked as 17th currency by Market Cap.
How to know if You can trust the stable coin?
Stable coins are the most regulated coins, it doesn't make them perfect, but they are more safe than the unregulated ones for sure.
Obviously You always need to do Your own research before putting Your trust into one of these coins.