What is a centralized and decentralized stablecoin?
Stablecoins are one of the important and essential assets whose existence Increase confidence It helps in the crypto space. The cryptocurrency market has a lot of fluctuations, and this is the reason why users need cash in difficult moments. Assets established at a fixed rate with the aim of protecting traders’ capital against fluctuations and helping to make transactions faster. These assets are divided into two categories: centralized stablecoins and decentralized stablecoins. These currencies help to accept digital currencies and increase the security of users’ assets. In fact, fixed currencies are the foundation of the crypto world and will influence its future. In this article, we will examine what types of stablecoins are and what their characteristics are. Therefore, we invite you to continue with us.
What is Centralized Stablecoins?
A centralized stablecoin is a group of digital currencies whose network is controlled by a specific company, person, organization or entity. This type of currency with constant rate They are very popular among users and their volume of transactions is high. For example, Tether (Usdt) is one of the famous stable crypto currencies, which is included in the category of centralized stable coins. This stablecoin has always been among the top 5 currencies in the market and its daily trading volume is more than all other currencies.
Centralized fixed rate currencies are divided into two categories. The first category are currencies that Product support (gold, oil, property, etc.) The second category is backed by fiat collateral, including the US dollar. The purpose of creating centralized stablecoins is to help preserve the value of assets and help make transactions faster and reduce related fees. The value of these currencies is determined 1 to 1. That is, whatever the support price of the currency is, the price of the currency will also be the same. For example, the price of 1 usdt is always equal to one dollar.
List of the best centralized stablecoins
As we mentioned, there are different types of centralized stablecoins and they are supported by valuable assets. In general, the list of the best centralized stable currencies are:
- Tether (Usdt): Tether is known as the most valuable and popular stablecoin in the crypto world. Tether fixed currency was launched in 2014 and its value is equivalent to one US dollar.
- Usd Coin or Usdc: Usdc is another centralized stablecoin whose value is equal to one US dollar. This currency is supported by Coinbase exchange and Circle financial institution.
- True USD (Tusd): True USD is one of the relatively new stablecoins that was launched in 2018. TUSD is known as the first currency fully backed by USD.
- Gemini USD (Gusd): Gemini is another popular stablecoin that was founded in 2014. This currency is linked to and backed by US dollars in an FDIC insured bank account.
What is Decentralized Stablecoins?
Decentralized stablecoins are completely transparent and maintainable. These types of currencies are not controlled by any organization or institution. These stablecoins use blockchains to maintain their value and to advance their goals. Smart contracts are dependent Benefiting from these features makes decentralized fixed rate assets completely safe and reliable.
Decentralized stablecoins are divided into two categories: algorithmic and cryptographic collateral. Collateralized stablecoins are decremented or incremented using token minting or burning. But algorithmic stablecoin has a completely different function. These types of decentralized fixed-rate currencies use smart contracts known as algorithmic market operations controllers (AMOs) to maintain their value.
List of the best decentralized stablecoins
Decentralized stablecoins also have different types and their popularity is increasing day by day. In general, the list of the best decentralized fixed currencies are:
- Dai (DAI): Dai is known as the most popular decentralized stablecoin. This currency is produced and supported by the currency based on the Ethereum blockchain in the MAKERDAO treasury.
- EOSDT (EOSDT): EOSDT is one of the currencies with a fixed rate that is linked to the US dollar. This currency uses IAS and Bitcoin as collateral and helps to increase the liquidity in the market. The price of EOSDT is very stable and is insured by IAS investment fund.
- DeFi Dollar (DUSD): DeFi Dollar is another decentralized stablecoin that follows the basic principles of DeFi. This unique currency has very high security and protects users from threats and dangers in the crypto world.
What is the difference between centralized and decentralized stablecoins?
As we mentioned, there are different types of stablecoins and they are divided into two categories, centralized and decentralized. In order to identify the best stablecoins, you need to know the difference between the different types of fixed rate currencies. Both of these assets were created with the aim of protecting traders’ capital against financial crises and market fluctuations, but they differ from each other in terms of performance. In general, the difference between centralized and decentralized stablecoins is:
- Difference in Supervision: Centralized stablecoins are supervised and controlled by a specific organization, person or body. But decentralized stablecoin is not like that and it is not controlled by any institution.
- Difference in backing: Centralized stablecoins are backed by commodities such as oil, gold, and fiat assets. But the decentralized fixed rate currency is supported by smart contracts.
- Difference in conversion and liquidity: Decentralized stablecoins have a higher conversion speed and liquidity than centralized stablecoins due to the fact that they are not monitored by any body.
What is the purpose of stablecoins?
Steelcoins were created with the aim of helping to increase liquidity in the market and prevent the decrease in the value of important assets such as oil, gold, dollars, etc. These currencies have a fixed rate and their price remains stable during financial and economic crises. Currencies with a fixed rate are divided into two categories, centralized and decentralized. In this article, we have thoroughly examined the centralized stablecoin and the decentralized stablecoin. We also introduced you to the list of the best centralized and decentralized stablecoins. Each of these assets have their own characteristics and in turn play an important role in the future of digital currencies. Therefore, by fully knowing these currencies, you can count on them in critical situations.
What is Centralized and Decentralized Stablecoin? The first time in the blog Valx. appeared.