In two days and 15 hours, Ethereum will transition from a proof-of-work (PoW) mechanism to an “environmentally friendly” consensus mechanism, commonly known as Ethereum Merge.
The long-awaited merger is essential as the Ethereum blockchain enables many decentralized applications (Daaps), non-fungible tokens (NFTs), metaverses, games, and stablecoins. In addition, all stablecoins require a blockchain network to perform their functions.
Stablecoins are blockchain-based crypto tokens backed by fiat currency for transactions. Some stablecoins are also backed by physical gold. Stablecoins require a blockchain or similar distributed ledger technology (DLT) to record transactions. However, the choice of technology depends on the stablecoin issuer.
– Commercial break –
For example, USDD, an algorithmic stablecoin on the TRON blockchain, does not work on the Ethereum blockchain. Nevertheless, the Ethereum blockchain is the most popular choice for stablecoins and other crypto products like NFT, DeFi, games, metaverse, etc.
Here are the 5 best stablecoins based on the Ethereum blockchain
According to crypto news aggregator Coinmarketcap, the top five crypto stablecoins based on the Ethereum (ETH) blockchain by market cap as of Sept. 12 are Tether USDT, Circle’s USDC, Binance BUSD, Maker DAO’s DAI and Frax Finance’s FRAX.
Tether (USDT): USDT is the world’s first stablecoin, created in 2014. It was issued by the Hong Kong-based company iFinex, owner of the Bitfinex crypto exchange. Tether has $66.4 billion in assets as of June 30, 2022, according to audited statements from accounting firm BDO Italia. USDT’s current market cap is approximately $69 billion.
USDC: USDC is issued by Circle and is backed by short-term US Treasury bonds. The accounting firm Grant Thornton LLP verifies the documents and issues monthly certificates. USDC’s current market cap is approximately $51 billion. According to a Grant Thornton audit report dated Aug. 24, 2022, USDC has approximately $54 billion in assets, backed by US government cash and treasury bills.
BUSD: BUSD is a stablecoin issued by Binance, the world’s largest crypto exchange, in partnership with New York-based crypto wallet company Paxos.
Binance has revealed that BUSD is fully backed by cash and cash equivalent pools owned and operated by Paxos and regulated by the New York State Department of Financial Services. BUSD has a market cap of approximately $20 billion.
STAFF: DAI is a stablecoin issued by Maker DAO, a decentralized autonomous organization. DAI is not backed by traditional assets or US dollars. Instead, it is backed by a combination of Ethereum-based DeFi contracts, Ethereum tokens, and USDC. DAI currently has a market cap of approximately $6 billion.
DAO is an organization where token holders make decisions through a voting mechanism. There is no centralized control over a person in a DAO. There is no centralized control over a person in a DAO.
FRAX: It is an algorithmic fractional stablecoin issued by FRAX Finance. FRAX is an open-source, decentralized, on-chain stablecoin on the Ethereum blockchain. It maintains its dollar-collateralized peg USDC: The native FXS crypto token uses real-time market data using its algorithm. The current market cap is about $1.4 billion.