Top 10 Stablecoins of 2025: An In-Depth Report

Stablecoins have become a cornerstone of the crypto ecosystem, providing a refuge from volatility by pegging their value to stable assets (usually fiat currencies like USD). The total stablecoin market has exploded in size – rising from about $20 billion in 2020 to roughly $246 billion by May 2025. Notably, stablecoin transaction volumes reached $27.6 trillion in 2024, even surpassing the combined annual volumes of Visa and Mastercard. This underscores how integral stablecoins have become for payments and trading.

Today’s stablecoin landscape spans various types: fiat-backed stablecoins fully collateralized by cash or treasuries; crypto-backed stablecoins secured by cryptocurrencies (often over-collateralized to mitigate volatility); and algorithmic or synthetic stablecoins which use financial engineering or algorithms (sometimes with partial collateral) to maintain their peg. Below, we rank the top 10 stablecoins by market capitalization (as of mid-2025) and provide an in-depth analysis of each, including their market stats, historical reliability (notable de-pegging events), collateral structure, and recent developments. A summary comparison is also provided:

Rank	Stablecoin	Symbol	Market Cap (USD)	Type	Primary Backing
1	Tether	USDT	$143 billion+	Fiat-backed	Cash, cash equivalents, treasuries
2	USD Coin	USDC	$58 billion+	Fiat-backed	Cash & U.S. Treasuries (1:1 reserves)
3	Sky Dollar	USDS	~$7.2 billion	Crypto-backed	Over-collateralized crypto & RWAs (MakerDAO “Sky”)
4	Ethena USD	USDe	~$5.6 billion	Crypto-backed	Crypto assets + short futures (synthetic)
5	Dai (MakerDAO)	DAI	~$4.0 billion	Crypto-backed	Over-collateralized crypto (ETH, USDC, etc.)
6	World Liberty USD	USD1	~$2.17 billion	Fiat-backed	Cash & T-bills (BitGo custody)
7	First Digital USD	FDUSD	~$1.60 billion	Fiat-backed	Cash & equivalents (HK trust)
8	PayPal USD	PYUSD	~$0.88 billion	Fiat-backed	Cash & equivalents (Paxos trust)
9	Stables Labs USDX	USDX	~$0.67 billion	Algorithmic/synthetic	Delta-neutral crypto positions
10	TrueUSD	TUSD	~$0.49 billion	Fiat-backed	Cash & equivalents (claimed; see issues)

1. Tether (USDT)

Tether is the largest stablecoin by far, with a market capitalization around $143–150 billion as of early-to-mid 2025. This makes USDT the third-largest crypto asset overall, after Bitcoin and Ether. Daily trading volumes for USDT are enormous – often tens of billions of dollars (over $60 billion in 24h volume, in one snapshot) – reflecting its role as the primary liquidity vehicle on exchanges. USDT’s supply has roughly doubled since 2023, rising from an ~$83 billion market cap in early 2025 (about 70% of the stablecoin market then) to new highs by mid-2025, as it absorbed demand from emerging markets and traders. Tether’s dominance is also seen in its wide usage across multiple blockchains (Ethereum, Tron, Solana, etc.), facilitating quick transfers and trading pair liquidity.

Reliability and Historical Performance of Tether (USDT)

USDT has generally maintained its $1.00 peg, but it has experienced minor de-pegging events during periods of market stress. Notably, Tether traded around $0.95 in May 2022 during the panic after TerraUSD’s collapse, though it recovered within hours. Over 2021–2023, analyses found USDT was actually less prone to deep or prolonged de-pegging than some rivals. For example, from mid-2021 to mid-2023, USDT only briefly dipped below $0.95 for one minute at worst, whereas USDC and DAI both fell under $0.90 for ~20 minutes during the March 2023 bank crisis. This relative price stability has bolstered confidence in USDT’s liquidity under pressure, although it doesn’t erase other concerns (e.g. transparency). Over time, Tether has never failed to honor redemptions, and its peg stability has improved since early years – in 2017–2018 USDT occasionally drifted 2–3% from $1 on thin markets, but such deviations are rare today.

Type and Structure of Collateral Backing

Tether is a fiat-collateralized stablecoin primarily backed by traditional financial assets. Each USDT token is intended to be backed 1:1 by reserves held by Tether Ltd. Historically, Tether’s reserves were a mix of cash, cash-equivalent assets, and some riskier instruments. As of 2023–2025, Tether reports that the bulk of reserves are in short-term U.S. Treasury bills, cash, and money market funds, with smaller portions in secured loans, corporate bonds, precious metals, and even Bitcoin. This marks an evolution from earlier years when Tether held significant unsecured commercial paper – a practice criticized for risk. Tether now publishes quarterly attestations and claims to hold excess reserves (equity buffer) of several billion dollars to shore up confidence. It’s worth noting that in 2021, Tether paid fines and agreed to disclosures after U.S. regulators (NYAG) found it had misrepresented its backing in the past (at one point in 2017, USDT was only ~74% backed). Since then, Tether says it has improved transparency, though it hasn’t obtained a full audit. Overall, USDT is fiat-backed but its reserve mix is broader (and somewhat less transparent) than rivals like USDC.

Regulatory or Ecosystem Developments of Tether (USDT)

Regulators have kept a close eye on Tether. In 2021, Tether settled with the New York Attorney General over past reserve misrepresentations, and the U.S. CFTC fined Tether for claims about fully backed reserves. These actions have pushed Tether toward greater disclosure, but skepticism remains (WEF notes “concerns… due to misleading statements regarding [USDT’s] underlying assets”). Unlike some competitors, USDT is not a regulated bank product; some jurisdictions (e.g. Canada) even restrict or ban USDT trading due to oversight concerns. Despite this, Tether’s footprint continues to grow globally – particularly in Asia and emerging markets where it’s used as a digital dollar substitute. In 2023–2024, Tether’s issuer began investing some profit into Bitcoin and mining infrastructure, and even explored launching a peer-to-peer payments app, signaling a broader ecosystem play. Looking ahead, impending stablecoin legislation (like the proposed U.S. STABLE Act and GENIUS Act) could require issuers to register and hold certain high-quality reserves. Tether’s ability to adapt to such regulation will be crucial. For now, USDT remains the de facto stablecoin standard, with deep integration on exchanges, DeFi platforms, and payment networks worldwide.

2. USD Coin (USDC)

USD Coin (USDC) is the second-largest stablecoin, with a market capitalization over $58–61 billion in mid-2025. Operated by Circle (in partnership with Coinbase via the Centre consortium), USDC has seen significant growth – in fact, it nearly doubled in 2024 (79% increase) to reach ~$44 billion by year-end, then further expanded to the $60B+ range by 2025 as crypto markets rebounded. USDC’s daily trading volumes are substantial (often several billions of USD in turnover), though typically lower than USDT’s since USDC is used slightly differently – it’s heavily utilized in DeFi protocols and institutional settlement in addition to exchange trading. USDC’s supply dipped in early 2023 (after a brief crisis, discussed below) but has since recovered and grown its market share to roughly 25% of the stablecoin sector by mid-2025. It remains the dominant regulated USD stablecoin in the Western markets.

Reliability and Historical Performance of USD Coin (USDC)

USDC has maintained a very tight peg to $1 for most of its history, reflecting strong market confidence – with one major exception. In March 2023, USDC famously de-pegged, falling as low as about $0.88 on some exchanges. This occurred after Circle revealed that $3.3 billion (about 8%) of USDC’s reserves were stuck in the failed Silicon Valley Bank during a U.S. bank run. The news spooked markets over a weekend, causing USDC (and any stablecoins depending on it) to drop well below $1. Circle assured it would cover any shortfall and, after U.S. regulators backstopped SVB depositors, USDC regained its peg within a couple of days. Aside from that episode, USDC’s price stability has been excellent. However, an analysis by S&P Global noted that USDC has experienced more frequent tiny de-pegs (e.g. dipping a few cents below $1 during market volatility) than USDT in 2021–2023. These deviations were short-lived. The March 2023 event underscored that even regulated stablecoins carry banking system risk, prompting Circle to adjust its reserve strategy (moving more cash to safer banks and overnight sweep programs). Post-2023, USDC has remained stable, and its monthly attestation reports have helped reinforce trust after that temporary scare.

Type and Structure of Collateral Backing

USDC is a fully fiat-backed stablecoin, often held up as a model of transparency. Every USDC token is backed 1:1 by cash or short-term U.S. government securities held in regulated U.S. financial institutions. Specifically, reserves are composed of USD deposits (held at a broad network of banks) and 3-month U.S. Treasury bills (held via a fund). Circle publishes monthly audited attestations of USDC’s reserve balances and has aimed to be as straightforward as possible – no lending out reserves or holding riskier assets. This conservative approach is why analysts consider USDC’s backing very secure compared to some competitors. After the SVB incident, Circle announced it would keep essentially all cash in well-capitalized institutions and even floated the idea of holding some reserves at the Fed (via a narrow bank or Fed’s reverse repo facility) if regulations allowed. USDC’s design means it is always redeemable 1:1 for actual USD by authorized users, and it has never refused redemption. In essence, USDC’s value proposition is high trust and transparency in its dollar backing – akin to a digital money market fund share.

Regulatory or Ecosystem Developments of USD Coin (USDC)

Circle has proactively engaged regulators – USDC is issued under U.S. state trust licenses (like New York’s BitLicense) and Circle is pursuing a federal payment stablecoin license if new laws pass. This regulatory-friendly stance positioned USDC as the stablecoin likely to benefit from clear U.S. rules. Indeed, proposed U.S. stablecoin bills in Congress (e.g. the Stablecoin Transparency Act) were largely inspired by models like USDC. Circle’s CEO has testified in Congress urging oversight that would require high-quality reserves (which USDC already has). In terms of ecosystem, USDC saw booming integration in 2021–22 DeFi, became the primary collateral for many dApps, and was even used as base currency for some CBDC pilot programs and corporate treasury uses. However, the U.S. banking turmoil in 2023 hurt USDC’s growth (some users rotated to USDT due to fear of U.S. banks). By 2025, Circle has refocused on global markets – launching Euro Coin (EURC) and native USDC on additional chains. Another development: Circle has planned an IPO (via SPAC) which, if completed, would subject it to public-company scrutiny. USDC’s close ties to traditional finance mean it will likely be heavily impacted (positively or negatively) by upcoming regulations. As of 2025, with ~25% market share, USDC is the second-most-used stablecoin and is especially favored where compliance and transparency are paramount.

3. Sky Dollar (USDS)

Sky Dollar (USDS) is a new stablecoin that emerged from the MakerDAO ecosystem’s evolution. By mid-2025, USDS reached a market cap of around $7.1 billion, making it the third-largest stablecoin. This rapid rise happened after MakerDAO (now rebranded as “Sky”) introduced USDS in late 2024 as an upgrade to its long-standing DAI stablecoin. USDS’s circulation grew as DAI holders were given the option to swap 1:1 into USDS. USDS is still in a growth phase – its trading volumes are relatively low (~$4 million daily on exchanges) because much of it is used within the Maker/Sky ecosystem for now. Many users deposit USDS into the Sky Protocol to earn savings interest, receiving “sUSDS” (a yield-bearing token) in return. Indeed, about $2.6 billion USDS is locked as sUSDS savings shares, reducing free float. Overall liquidity is gradually building: USDS is becoming available on major venues and can be swapped for USDT, USDC, ETH, etc., but it’s not yet as ubiquitous on exchanges as older stablecoins. Its rise to multibillion supply in under a year reflects the MakerDAO community’s push to make USDS a leading stablecoin.

Reliability and Historical Performance of Sky Dollar (USDS)

As a newly launched stablecoin (officially introduced in Q4 2024), USDS has so far maintained its $1 peg without major incidents. It inherits MakerDAO’s legacy of robust peg management – over DAI’s history since 2017, the system generally held stability except during extreme events (e.g., DAI briefly traded above $1.10 during the “Black Thursday” crash of March 2020 and fell to ~$0.90 during the USDC bank run in March 2023, as DAI was partially collateralized by USDC). Those lessons informed USDS’s design. USDS is fully collateralized and has stability mechanisms similar to DAI, so its reliability is expected to mirror DAI’s strong track record. One difference is that Sky is aggressively promoting USDS adoption via high savings rates – currently, users can earn attractive yields by holding sUSDS (the savings derivative). While this hasn’t caused peg volatility, it did lead to a financial strain on the issuer: Sky’s interest incentives caused a $5 million operating loss in Q1 2025, a reversal from prior profits. This indicates that the peg has been upheld in part by significant incentives. So far, arbitrage and the Sky Protocol’s peg mechanisms have kept USDS ≈ $1.000 (often within ±0.1¢). Its convertibility 1:1 with DAI also helped stability during the transition. In summary, USDS’s historical performance is short but steady, leveraging the battle-tested frameworks that kept DAI largely stable for years.

Type and Structure of Collateral Backing

USDS is a crypto-backed (over-collateralized) stablecoin, continuing MakerDAO’s model but with some new twists. Users generate USDS by depositing collateral assets into Sky’s smart contracts – these include cryptocurrencies like ETH, WBTC (wrapped Bitcoin), and also real-world asset (RWA) vaults such as tokenized U.S. Treasuries and other stablecoins. To account for crypto volatility, USDS is over-collateralized (typically a user must lock >$1.5 of collateral to mint $1 of USDS, similar to DAI’s 150% minimum for ETH collateral). If collateral values drop too much, automated liquidations occur to keep USDS fully backed. A major development in collateral is MakerDAO’s pivot to real-world assets – by 2025, a large portion of backing comes from investments like short-term Treasury bonds via institutional partners. This gives USDS more stability and yield (from RWA interest) compared to purely crypto-backed predecessors. The Sky Protocol Savings Rate (akin to DAI’s DSR) allows USDS holders to deposit USDS and earn yield, essentially paid from the revenue on those RWA and protocol fees. When users do so, they receive sUSDS tokens which represent a claim on their deposited USDS plus accrued interest. USDS’s design thus mixes decentralized crypto collateral with traditional assets, aiming for a “best of both” approach: decentralized governance and censorship-resistance, yet partially backed by stable real-world value.

Regulatory or Ecosystem Developments of Sky Dollar (USDS)

USDS was born from MakerDAO’s Endgame Plan, a sweeping restructuring of the protocol. In August 2024, MakerDAO rebranded to “Sky” and announced USDS as the upgraded stablecoin for mass adoption, alongside a new governance token (SKY) replacing MKR. This upgrade was optional – DAI and USDS coexist, but incentives strongly favor USDS (e.g., higher savings rates). The goal is to eventually make USDS the primary token, with DAI fading out. This shift has regulatory and strategic angles: by concentrating on USDS and diversifying collateral (and even integrating under a U.S. legal structure for RWA investments), Sky aims to make the stablecoin more resilient to regulation. Nonetheless, MakerDAO/Sky operates globally and in a decentralized manner, so USDS is not directly regulated by any single country. One ecosystem benefit of USDS was partnerships: Sky inked deals with firms like Coinbase and Monetalis for RWA, and even ran pilot programs for placing reserve assets via institutions. The Sky team’s bold move was raising the USDS Savings Rate significantly in early 2025 (above 5%), to attract users – as noted, this caused short-term losses, but it succeeded in growing USDS supply. Some in the community debate the sustainability of such incentives, but others see it as a “necessary gamble to establish USDS” in a competitive market. By mid-2025, USDS is gaining broader usage: it’s swap-friendly with major stables and being added to protocols (e.g., Aave and Compound proposals for USDS markets). In summary, USDS represents MakerDAO’s ambitious evolution, seeking to scale up a decentralized stablecoin into mainstream use, backed by both crypto and real assets. Its progress will depend on balancing growth incentives with prudent financial management, and navigating any regulatory scrutiny on decentralized dollar tokens.

4. Ethena USD (USDe)

Ethena USD (USDe) is a novel entrant in the stablecoin arena, quickly rising to the #4 spot with a market cap around $5.5–5.7 billion. Launched in 2024 by the Ethena protocol, USDe gained attention as a “synthetic dollar” stablecoin that does not rely on holding fiat reserves. Its growth has been impressive for a new project – by 2025 USDe is roughly on par with DAI in size. Trading volumes for USDe are moderate (~$90 million daily in one snapshot), indicating gradually increasing adoption. It’s listed on some major exchanges and used in DeFi swaps, though not yet as universally available as USDT/USDC. Ethena’s partnerships and backing (including support from institutional players) have bolstered confidence, helping USDe achieve a multi-billion supply within its first year.

Reliability and Historical Performance of Ethena USD (USDe)

USDe’s design is geared toward maintaining a stable $1 value via hedging, and since launch it has held its peg effectively. Importantly, USDe is not pegged by convertibility to a dollar reserve, but rather by financial engineering. Ethena uses a delta-neutral strategy (explained below) to keep USDe’s value steady. So far, this approach has prevented any significant depeg – USDe consistently trades at ~$1.00 with only tiny fluctuations of a few basis points. There have been no major stress events yet in USDe’s short history; the true tests will come during extreme market volatility. One point of confidence is Ethena’s transparency – collateral positions are on-chain and USDe is fully backed (though by crypto assets). If the hedging works as designed, USDe should remain stable as long as counterparties (exchanges for futures, etc.) remain solvent. There is some smart contract risk and dependence on market liquidity for hedging, but Ethena has managed these carefully. In late 2024, as USDe scaled past $1 billion, the protocol successfully avoided peg deviations even when crypto prices swung – an early proof of concept. To date, USDe has not experienced de-pegging events, and its model offers a different risk profile (trading risk vs. bank or custodian risk). However, observers note that USDe is young, and long-term reliability will hinge on the team’s ability to maintain the hedge strategy through all market conditions.

Type and Structure of Collateral Backing

Ethena USDe is a crypto-collateralized stablecoin with a synthetic peg mechanism. Unlike fiat-backed coins, USDe doesn’t hold dollars in a bank; instead, it is backed by crypto assets (like ETH or BTC) combined with short positions in futures markets. The idea is to create a delta-neutral portfolio: the protocol takes user deposits of volatile crypto and then shorts equivalent exposures via derivatives. For example, if 1 USDe is backed by $1 worth of ETH, Ethena will also open a short ETH futures position of $1. If ETH’s price drops, the collateral loses value but the short gains value, and vice versa – offsetting to keep the system’s net assets stable in USD terms. This hedging mechanism means the collateral’s USD value remains approximately constant, allowing USDe to be fully collateralized by effectively USD-neutral assets. The result is a “censorship-resistant, on-chain stablecoin” that doesn’t rely on trusting a central custodian. Ethena’s approach is somewhat akin to a stablecoin version of a balanced long/short fund. Collateralization ratios are maintained above 100% to account for any slippage or cost in the hedges. The protocol’s transparency shows exactly what assets back USDe and the status of hedge positions. Because Ethena uses off-chain futures (on exchanges) for hedging, it partners with prime brokers/custodians to hold those positions. This introduces some counterparty risk (if an exchange defaulted, it could impact the hedge), but Ethena likely diversifies across venues. In summary, USDe’s backing structure is innovative – it’s neither fiat nor purely crypto HODL; it’s crypto plus a mirrored short. This provides stability without dollars, though it requires active management and trust in Ethena’s strategy.

Regulatory or Ecosystem Developments of Ethena USD (USDe)

Ethena and USDe have drawn attention for bridging institutional capital into DeFi. In late 2024, Ethena announced partnerships with major TradFi players, most notably a collaboration with asset manager BlackRock. Through this partnership, Ethena launched an initiative called “USDtb” – effectively tokenizing a BlackRock-managed fund as a stablecoin offering. USDtb (not to be confused with USDe) is a separate stablecoin product backed by BlackRock’s money market fund assets, illustrating Ethena’s strategy of multiple products and deep institutional links. Such alliances gave Ethena credibility and potentially regulatory cover, as BlackRock’s involvement suggests rigorous oversight. Ethena’s protocol token (ENA) saw bullish sentiment as these developments unfolded, indicating market approval of the model. On the regulatory front, USDe occupies a gray area: it is not fiat-backed, so it might sidestep some impending stablecoin regulations that target payment stablecoins. However, regulators may scrutinize it as a kind of derivatives-based stablecoin. Ethena will need to ensure compliance with any trading and securities laws (for example, the use of futures and the potential classification of its tokenized strategy as an investment product). So far, no major regulatory actions have targeted Ethena. In the ecosystem, USDe has been integrated into DeFi lending platforms and is used for yield strategies. Its growth to multi-billion scale shows users’ appetite for a decentralized, hedged stablecoin. Ethena’s success could pave the way for more “algorithmic” stablecoins that avoid fiat banking rails. The project’s focus now is expanding USDe’s reach (more exchange listings and DeFi partnerships) and continuously proving the soundness of its model. With heavyweights like BlackRock indirectly in the mix, USDe stands as an example of TradFi-meets-DeFi in the stablecoin space.

5. Dai (DAI)

Dai (DAI) is the original decentralized stablecoin, launched by MakerDAO in 2017. As of mid-2025, DAI’s market capitalization is around $4.0 billion. Not long ago, DAI was the largest crypto-backed stablecoin; it has since been overtaken by its successor USDS (Sky Dollar) after MakerDAO’s rebranding. In fact, DAI’s supply has declined from its peak (over $6 billion in 2022) as many holders converted DAI into USDS in late 2024–2025. Nonetheless, DAI remains in circulation for those who chose not to migrate, and it’s still among the top five stablecoins by size. Daily trading volume for DAI is healthy (tens of millions of dollars, e.g. ~$63 million in a 24h period), and DAI is deeply integrated in DeFi protocols (as collateral, lending asset, etc.). It’s listed on almost every crypto exchange and DEX, usually paired with other major coins. Thus, even as USDS rises, DAI continues to function as a major stablecoin, especially in decentralized contexts.

Reliability and Historical Performance od Dai (DAI)

DAI has a long track record of maintaining its $1 peg through various market cycles, though with a few notable deviations under stress. Generally, DAI trades very close to $1.00 thanks to MakerDAO’s peg mechanisms (target rate feedback, the Peg Stability Module, etc.). Two historical events stand out:

• In March 2020 (“Black Thursday”), a sudden ETH price crash led to some under-collateralized vaults and DAI supply shrinkage, causing DAI’s market price to spike up to ~$1.10 due to shortage. MakerDAO responded by introducing USDC collateral and other measures to restore the peg.
• In March 2023, when USDC (a major component of DAI’s collateral) depegged, DAI also fell to about $0.88 at the worst point. This was because roughly 40% of DAI’s backing was USDC, and arbitrage was temporarily impaired. Once USDC recovered, DAI returned to $1.
  Outside of these episodes, DAI has been quite stable, usually staying within ±1% of the peg. MakerDAO’s risk parameters (like liquidation ratios and fees) and the Peg Stability Module (PSM) – which lets users swap 1 DAI for $1 of USDC (or other stable collateral) – have been effective in dampening minor peg pressures. Over 2021–2022, DAI sometimes traded a touch above $1.001 due to strong demand (hence Maker lowered stability fees or increased PSM capacity to push it down). Overall, DAI’s performance has been reliable, proving that a decentralized stablecoin can hold parity over multi-year spans. The creation of USDS hasn’t introduced instability to DAI; Maker ensured a 1:1 convertibility, so DAI holders can always switch to USDS, keeping DAI itself at par. The main risk for DAI historically was collateral risk (e.g., crypto crashes or USDC blacklisting), which the Maker community actively manages.

Type and Structure of Collateral Backing

DAI is a crypto-collateralized stablecoin, over-collateralized by a basket of assets. Users generate DAI by locking collateral in MakerDAO smart contracts (vaults). Initially, in its Single-Collateral DAI days, only ETH was accepted. Since the 2019 transition to Multi-Collateral DAI (MCD), MakerDAO has approved many collateral types: **ETH and other major cryptocurrencies, tokenized assets like WBTC, liquidity provider tokens, and critically, other stablecoins (USDC, USDP, etc.). By design, most vault types require a minimum of 150% collateralization (though some like USDC PSM operate at 100% since they’re stable). To address low yield on crypto assets, Maker increasingly allocated unused DAI (from fees or PSM reserves) into real-world assets such as short-term bonds via partners. By 2025, a substantial portion of DAI’s backing comes indirectly from U.S. Treasury bill investments and loans that MakerDAO made (through trusts or special purpose vehicles) – these earn interest which funds DAI’s savings rate and MKR buybacks. In essence, DAI’s collateral pool became a diverse mix of crypto and real-world assets, a trend that culminated in the USDS initiative. It’s worth noting that about 65% of DAI was at one point backed by USDC (after March 2023), raising concerns about decentralization. Maker responded by lowering reliance on centralized stablecoins over time (e.g., introducing mechanisms to slowly convert USDC to DAO-held RWA). Still, DAI’s collateral structure has trade-offs: it enjoys trustless crypto backing but also inherited centralized elements via stablecoin collateral and RWAs. DAI is created and destroyed by users interacting with the protocol – whenever someone repays a DAI loan, that DAI is burned, keeping supply in check relative to collateral. This dynamic system has kept DAI’s value stable through automated market mechanisms.

Regulatory or Ecosystem Developments of Dai (DAI)

As a decentralized entity, MakerDAO (now Sky) has had to anticipate regulatory moves. Holding ~$1 billion of USDC made DAI vulnerable to, say, a scenario where USDC could be frozen by regulators – a fact not lost on Maker’s community. This concern fueled initiatives like “Endgame Plan” which ultimately produced USDS (covered above). For DAI specifically, one recent development was Maker’s introduction of the EUSD “Enhancer” token (GHO) by Aave and other protocols – competitors in decentralized stablecoins have emerged (e.g., Aave’s GHO stablecoin launched mid-2023). While DAI remained larger than these, the landscape is shifting. Regulatory-wise, DAI itself is not directly compliant with any fiat regime (unlike USDC, it has no single issuer to regulate). However, authorities have signaled that even decentralized stablecoins may face rules if they become large. MakerDAO preemptively registered some legal entities for its RWA investments, working with regulated custodians (like in the U.S. and Europe) – this gives a semi-compliant wrapper around part of DAI’s backing. In the DeFi ecosystem, DAI has been a staple of decentralized finance: it’s the base currency on many DEX pairs, widely used in lending markets (Compound, Aave) and yield farms. Even after USDS’s launch, Maker has kept DAI functional and relevant. Some users prefer DAI because of its fully decentralized origin (no single company can freeze DAI itself, though collateral like USDC could be). In late 2023, MakerDAO actually increased the DAI Savings Rate (DSR) significantly (up to 3.3%) to attract users during the bear market, which temporarily shrank DAI supply. This move was a prelude to the even higher rates offered on USDS. Overall, DAI’s role is evolving – it laid the groundwork for decentralized stablecoins and remains important, but Maker’s strategic focus has shifted to USDS for future growth. Still, DAI’s resilience and the community’s governance experience remain a backbone for the new era.

6. World Liberty Financial USD (USD1)

World Liberty Financial USD (USD1) burst onto the scene in 2025 as one of the fastest-growing stablecoins in history. Launched in March 2025, USD1’s market cap rocketed to about $2.1 billion within just over a month. By May 2025 it stabilized around $2.17 billion, placing it among the top stablecoins globally. This astonishing growth was largely driven by a single blockbuster deal: at the Token2049 conference in April 2025, USD1 was chosen to facilitate a $2 billion investment transaction between Abu Dhabi’s MGX fund and Binance. That institutional deal (exclusively using USD1) immediately propelled the stablecoin’s supply upwards. Trading volume for USD1 has also been strong – e.g. on one day it saw ~$280 million turnover, and it’s actively traded on exchanges like Binance (which listed USD1 in May 2025). Liquidity is growing quickly as more users obtain USD1 for cross-border transfers and trading. Essentially, USD1 sprinted from obscurity to a top-10 stablecoin almost overnight, thanks to savvy partnerships and a clear use-case.

Reliability and Historical Performance World Liberty Financial USD (USD1)

Given its short history, USD1 has so far maintained a solid peg to the US dollar, typically trading at ~$0.999–1.000. There have been minimal fluctuations – one could observe a slight dip or premium of a few hundredths of a cent occasionally, but no notable “depeg” event since launch. Its rapid influx of supply was handled smoothly, indicating the issuer’s ability to mint/redeem at parity efficiently. One point to monitor is liquidity distribution: as a new coin, liquidity was initially concentrated on Binance and a few platforms, which could have led to volatility if large holders moved. But the team appears to manage liquidity well, and arbitrage via direct redemption keeps the price aligned with $1. As more exchanges list USD1, its stability should only improve. Trust in USD1’s peg is bolstered by its fully reserved model and reputable custodial setup (BitGo). However, it’s worth noting that USD1’s extremely fast growth has raised some eyebrows, and any negative news (regulatory or otherwise) could test market confidence. Interestingly, the project markets USD1 as “institutional-ready,” suggesting a focus on avoiding any missteps that could cause a loss of peg. So far, so good – USD1’s peg reliability in its first few months has been exemplary. It will need to establish a longer track record to conclusively prove its stability under all market conditions, but early performance is strong.

Type and Structure of Collateral Backing

USD1 is a fiat-backed stablecoin, pegged 1:1 to the US dollar and fully collateralized by traditional financial assets. Per the issuer (World Liberty Financial Inc.), every USD1 token is redeemable for one U.S. dollar, and reserves are held in “high-quality, short-term USD-denominated assets”. Specifically, the backing assets are cash deposits, cash equivalents, and short-term U.S. Treasury bills. These are custodied by BitGo Trust, a well-known regulated custodian in the crypto industry. BitGo’s involvement adds credibility, as it provides insured, audited custody of the reserve assets. The structure is thus very similar to USDC or USDT: USD1’s value comes from an equivalent pool of dollars/treasuries held off-chain. Notably, USD1’s reserves strategy appears conservative (no risky commercial paper or crypto – strictly government-backed or cash assets). This aligns with its pitch as an “institutional” stablecoin that prioritizes safety and compliance. Another interesting aspect is that USD1 operates on multiple blockchains (launched on Ethereum and BNB Chain, with plans for more), improving its utility. Users can always redeem USD1 via the issuer, creating an arbitrage mechanism: if USD1 falls below $1 on the market, traders can buy it cheap and redeem for $1 of fiat, which should push the price back up. Conversely, if it goes above $1, new issuance (or selling by arbitrageurs) brings it down. This classic fiat-backed model has proven effective for stability. In summary, USD1’s collateral structure is straightforward and transparent – one dollar (or equivalent) in reserve for each token, held by a reputable trust company, making it a fully backed digital dollar.

Regulatory or Ecosystem Developments of World Liberty Financial USD (USD1)

World Liberty Financial USD gained notoriety partly due to its political associations. The project is “inspired by President Donald J. Trump,” and World Liberty Financial Inc. (WLFI) positions itself with a patriotic branding. It came to light that some individuals involved had ties to Trump’s circle, leading to the coin being dubbed by media as a “Trump-linked stablecoin.” This has caught the eye of regulators and politicians – for instance, discussion arose in the context of stablecoin legislation where some U.S. lawmakers expressed concern about any Trump-affiliated crypto ventures. However, as of 2025, USD1 itself hasn’t faced regulatory action. In fact, Binance’s listing of USD1 in May 2025 suggests the coin cleared significant compliance checks; Binance even put USD1 trading pair in its innovation zone. On the regulatory front, USD1 is issued by WLFI but the reserves are managed by BitGo, which is regulated (BitGo Trust is a qualified custodian in the U.S.). This structure likely helps USD1 navigate U.S. regulations for now. In terms of ecosystem, USD1’s big splash was the MGX–Binance deal which effectively validated its use in large-scale transactions. Following that, more exchanges and platforms have been exploring USD1. It’s also getting integrated as a payment rail for cross-border transfers between certain partners, aligning with WLFI’s goal to bridge traditional finance and DeFi. Another development: MEXC and other exchanges listed USD1 around the same time, and liquidity pools on some DEXes are forming. We should also highlight that USD1’s meteoric rise – from $130M to $2B+ in weeks – has drawn interest from analysts and possibly regulators who will want to ensure that reserve attestation is sound. WLFI temporarily paused real-time reserve attestations in one instance due to a reporting glitch (where liabilities were shown exceeding assets – which was claimed to be an error), but resumed them after resolving it. Keeping trust via transparent audits will be key. In short, USD1 is an example of a new wave of stablecoins backed by prominent investors and brands, leveraging trust frameworks (BitGo custody) and seizing market gaps (BUSD’s exit from Binance) to rapidly scale. Its continued success will hinge on maintaining credibility and perhaps staying on the right side of evolving stablecoin regulations (like potential U.S. federal laws or Hong Kong’s new stablecoin regime, though WLFI is U.S.-based).

7. First Digital USD (FDUSD)

First Digital USD (FDUSD) is a Hong Kong-incubated stablecoin that launched in mid-2023 and quickly gained traction, especially after Binance promoted it. By 2025, FDUSD’s market cap is around $1.6 billion, placing it among the top stablecoins. FDUSD’s rise was gradual at first, but accelerated when Binance, in the wake of BUSD’s regulatory troubles, endorsed FDUSD as a replacement on its platform. Binance added zero-fee trading promotions for FDUSD pairs, leading to very high trading volumes – at one point FDUSD saw over $4 billion in 24h volume, extraordinary for its size. That volume suggests that many Binance users swapped into FDUSD for trading incentives. Outside Binance, FDUSD is also listed on a few other exchanges and used in Asian markets as a USD proxy. Its growth to $1.6B, while less explosive than USD1’s, signifies a successful entry – it effectively scooped up market share freed by BUSD’s phase-out. FDUSD’s liquidity is currently concentrated on major CEXs, with some emerging presence in DeFi. It consistently ranks in the top 5–7 stablecoins by daily turnover, reflecting strong demand in its target regions.

Reliability and Historical Performance of First Digital USD (FDUSD)

Since its inception, FDUSD has maintained a fairly tight peg to $1, though it hasn’t been completely without minor wobbles. Generally, FDUSD trades at $0.996–1.002 range, which is within acceptable bounds. Notable, there was an instance in late 2023 where rumors prompted FDUSD to dip a few cents (into the $0.97–0.98 range briefly) as traders reacted to speculation about its reserves – these proved to be false alarms, and the price promptly normalized. By and large, arbitrage and redemption mechanisms have kept FDUSD stable. The issuer’s commitment to full backing and its presence in a regulated sandbox (Hong Kong) have helped prevent any serious depeg. FDUSD did not suffer any event like USDC’s bank scare; its stability was tested mostly by market technicals (like initial low liquidity). For example, early on, FDUSD had a very small circulating supply; when Binance first listed it, the price spiked slightly above $1 due to limited supply versus sudden demand – but as supply increased, it settled to the peg. So far, FDUSD can be considered reliable. Its peg is further reinforced by Binance’s involvement – Binance has a vested interest in FDUSD stability on its platform and would likely intervene (such as pausing trading or helping with liquidity) if any extreme divergence occurred. Additionally, FDUSD’s operations have been smooth: no scandals or freezes reported. In summary, FDUSD’s performance has been stable with only trivial deviations, giving users confidence in using it as a dollar substitute.

Type and Structure of Collateral Backing

FDUSD is a fiat-collateralized stablecoin issued by First Digital Trust, a Hong Kong-registered trust company. Its reserves consist of cash and highly liquid cash equivalents (e.g. bank deposits and short-term treasuries), held in segregated accounts under the trust’s custody. Hong Kong’s regulatory environment influenced its structure – First Digital launched FDUSD just as Hong Kong introduced clear guidelines that stablecoins must be fully backed by safe assets and cannot be algo-based. Indeed, FDUSD’s model is straightforward: for every FDUSD issued, an equivalent USD or USD-denominated asset is held by the trust. Hong Kong’s Trust Ordinance requires strict segregation of reserve assets, preventing any commingling with other funds. This provides an extra layer of security. Additionally, First Digital Trust is audited and operates in HKMA’s stablecoin sandbox, meaning regulators have visibility into its operations. The backing assets likely include short-dated U.S. Treasury bills, given many HK fintechs use that to generate some yield while keeping risk low. FDUSD’s whitepaper also emphasizes that reserves are in regulated financial institutions across Asia. Notably, one restriction: upon launch, FDUSD was not available to retail users in Hong Kong due to regulatory posture (until formal stablecoin licensing is active). This indicates the project is following rules to the letter – focusing on international and institutional users initially. Redemption of FDUSD is done through the trust (eligible holders can swap FDUSD for USD, likely with KYC). This mechanism, plus market makers, ensures price parity. Overall, FDUSD’s collateral approach mirrors that of USDC/USDP, etc., but with Hong Kong’s regulatory stamp on it. It’s a fully backed digital dollar with an Asian pedigree.

Regulatory or Ecosystem Developments of First Digital USD (FDUSD)

FDUSD’s story is intertwined with Hong Kong’s re-emergence as a crypto hub. In mid-2023, Hong Kong regulators (HKMA and SFC) signaled support for regulated stablecoins and introduced a bill to license issuers. First Digital jumped on this opportunity, making FDUSD one of the first Hong Kong-based stablecoins. It likely operated under a regulatory sandbox awaiting the full licensing regime (which was passed in late 2024). This means FDUSD is on track to be formally licensed in Hong Kong under new stablecoin rules, which require local incorporation, 100% backing by fiat, and disallow algorithmic models. This regulatory imprimatur could make FDUSD attractive to institutions in Asia that prefer compliant digital assets. On the ecosystem front, the biggest development was Binance’s support: in summer 2023, as Binance wound down Binance USD (BUSD) due to U.S. regulatory orders on Paxos, it began promoting FDUSD as an alternative. Binance added FDUSD trading pairs (BTC/FDUSD, ETH/FDUSD, etc.) and even auto-converted some idle balances to FDUSD. It also offered zero trading fees on FDUSD pairs, driving adoption. By 2024, FDUSD became a key stablecoin on Binance alongside USDT. This symbiotic relationship massively boosted FDUSD’s circulation and trust (users assumed Binance vetted it). Another ecosystem note: Justin Sun (Tron founder) publicly talked up FDUSD in 2023, suggesting it might be used in Tron’s ecosystem; this caused speculation, but Tron’s own USDD remained separate. Instead, FDUSD has carved a niche in CeFi trading and some CeDeFi (like Binance Smart Chain usage). On the U.S. regulatory side, since First Digital Trust is outside U.S. jurisdiction, FDUSD hasn’t faced direct U.S. scrutiny. However, any global stablecoin regs will affect it. Being based in Hong Kong might become a strength if Hong Kong’s framework is seen as rigorous. Indeed, by 2025 Hong Kong passed its stablecoin bill, positioning FDUSD to be one of the first officially licensed non-bank stablecoins in that region. Looking forward, FDUSD aims to expand beyond Binance – possibly to other exchanges and DeFi platforms. Its success showcases how supportive regulation and major exchange backing can give rise to a top stablecoin in a short time.

8. PayPal USD (PYUSD)

PayPal USD (PYUSD) is a high-profile stablecoin launched by fintech giant PayPal in August 2023. As of mid-2025, PYUSD’s market capitalization is approximately $878 million, placing it around 8th among stablecoins. PYUSD’s growth has been steady but not explosive – it crossed $100M in its first month, then gradually increased as PayPal integrated it into more user features. By 2024, broader adoption (including listings on exchanges like Coinbase and Kraken) helped push it toward the $1B mark. Trading volumes for PYUSD are relatively modest compared to its peers; a typical daily volume is on the order of ~$10 million. This reflects that a significant chunk of PYUSD is held by PayPal users for transactions rather than active trading on crypto exchanges. Indeed, within PayPal’s own app, users can buy/sell/send PYUSD, but those internal transactions don’t show up as “trading volume.” On exchanges, liquidity for PYUSD pairs has been growing – it’s often paired with USD, USDT, or BTC on U.S.-compliant platforms. Overall, PYUSD’s market presence is meaningful but still somewhat limited to the PayPal ecosystem and U.S. crypto market. Its slower growth compared to, say, USDC’s early days might be due to regulatory caution and prioritizing gradual rollout to PayPal’s huge user base.

Reliability and Historical Performance of PayPal USD (PYUSD)

PYUSD has had a very stable peg since inception, never straying far from $1.00. This is expected, given its fully backed nature and the reputational heft of PayPal and Paxos (the issuer) behind it. The coin has consistently traded at $1 on platforms, with perhaps the occasional tiny deviation of 0.1–0.2% during periods of low liquidity. There were no major depeg incidents; even during the March 2023 bank scare (which predated PYUSD’s launch) or other stablecoin shakes, PYUSD wasn’t around to be affected. In later turbulent periods, PYUSD held firm. The one challenge PYUSD faced was initial illiquidity on some DEXs, where at launch a few trades on Uniswap moved the price due to low pools, but arbitrage quickly corrected it. Also, because PYUSD can be redeemed 1:1 via Paxos, any discount in price invites arbitrage traders to profit (ensuring the peg). PayPal’s design also includes centralized control features (they can freeze addresses if required, etc., similar to USDC’s blacklist ability), which, while a negative for decentralization, can be seen as adding perceived safety for mainstream users. No notable freezes or issues have occurred publicly, though Paxos/PayPal did emphasize compliance capabilities. In summary, PYUSD’s historical performance has been uneventful and stable, exactly what one wants from a payment stablecoin. The main caveat is that it hasn’t yet been tested by an extreme crypto market meltdown (e.g., if Paxos faced a scenario like SVB collapse affecting reserves – but Paxos keeps reserves in very safe assets to avoid that). Given Paxos’s track record (their prior stablecoins like USDP and BUSD maintained pegs flawlessly until intentionally wound down), PYUSD is likely to continue on a reliably steady course.

Type and Structure of Collateral Backing

PYUSD is a fiat-backed stablecoin issued by Paxos Trust Company on behalf of PayPal. It is 100% collateralized by U.S. dollar deposits, U.S. Treasuries and similar cash equivalents. Paxos publishes monthly reserve attestations for PYUSD, which have consistently shown full backing (typically, a majority in T-bill holdings and the rest in overnight repo or cash). Essentially, PYUSD’s backing and structure are the same as Paxos’s own stablecoin USDP (Pax Dollar), since it’s managed by the same trust entity. Each PYUSD is redeemable for $1 through Paxos. The stablecoin runs primarily on Ethereum as an ERC-20 token. An important note: PayPal built additional infrastructure around PYUSD – for example, they allow instant conversion between PYUSD and other currencies within the PayPal app, and merchants can accept PYUSD via PayPal. But on-chain, PYUSD is straightforward: an ERC-20 token with a centralized mint/burn by Paxos. The smart contract has provisions for freezing and clawback, as required by regulators (standard for a regulated stablecoin; USDC and USDP have similar features). Some in the crypto community were wary of these features, but they align with the compliance-first approach. The reserves are held by Paxos in bankruptcy-remote trust accounts, meaning customers are legally entitled to them even if Paxos were to go under. This is a strong protection offered by New York financial regulations. In short, PYUSD’s collateral model is as conservative as they come – $1 in high-quality liquid assets for every token, overseen by a regulated trust company and examined by regulators (NYDFS). This gives a high assurance of stability, mirroring USDC’s model but under PayPal’s brand.

Regulatory or Ecosystem Developments of PayPal USD (PYUSD)

PYUSD is notable for being the first stablecoin issued by a major fintech company. Its launch was approved by the New York Department of Financial Services (NYDFS), making it one of the most regulated stablecoins. This was a bold move in the U.S., especially since regulators had been clamping down on crypto (the SEC even took action against Paxos’s BUSD in early 2023). PayPal’s entry signaled that stablecoins were moving into mainstream fintech. From a regulatory standpoint, PayPal likely launched PYUSD in anticipation of clearer stablecoin laws – they have been actively lobbying for a federal framework. Indeed, PayPal’s involvement has been cited in Congressional discussions as evidence of the need for clear rules (better to have U.S. companies in the game than drive stablecoins offshore). Thus far, PYUSD has had a smooth regulatory journey: it’s fully compliant under NYDFS’s regime, and there have been no public issues. In the ecosystem, PayPal has begun integrating PYUSD beyond just user balances. For example, in late 2023 they enabled Venmo (which PayPal owns) to support transfers of PYUSD. PayPal’s merchant network is also a potential huge avenue – they have hinted that eventually e-commerce checkouts could settle in PYUSD. If that happens, PYUSD could see major growth. However, adoption has been somewhat slow – many of PayPal’s ~350 million users are still unaware or uninterested in the crypto stablecoin feature. To spur usage, PayPal in 2024 added education about PYUSD and even incentivized some transfers. On the crypto-native side, PYUSD has been listed on a few U.S. exchanges (like Coinbase) and integrated into some DeFi protocols (Uniswap pools, lending on Aave with conservative parameters). It’s gradually being treated similar to other fiat stables. An interesting partnership: Ledger (the hardware wallet maker) teamed up with PayPal to allow buying PYUSD through Ledger Live, showing a melding of fintech and self-custody worlds. Overall, PYUSD sits at the intersection of traditional finance and crypto. Its future may hinge on whether PayPal can leverage its massive user base to drive real-world usage (like remittances, commerce) of PYUSD. Additionally, how regulators finalize stablecoin laws will determine if companies like PayPal gain an advantage. So far, PYUSD stands as a symbol of crypto’s integration into mainstream payments, well-regulated but still finding its market niche.

9. Stables Labs USDX (USDX)

Stables Labs USDX (USDX) is a relatively new stablecoin that takes an algorithmic, trading-based approach to stability. As of 2025, USDX’s market cap is roughly $667 million, putting it in the top 10. This coin flew under the radar of many retail users but has quietly grown through specialized use in yield strategies. USDX’s trading volume is modest – on the order of a few hundred thousand dollars per day on exchanges – since it’s not yet widely listed on big exchanges. Its main venues are certain decentralized platforms and smaller exchanges (MEXC was one early supporter). Much of USDX’s supply is utilized within Stables Labs’ own platform or by arbitrageurs rather than active retail trading. The market cap growth to over half a billion indicates that some sizable players have minted USDX, likely attracted by its unique model (which we’ll cover) to park funds in a stable asset that can earn yield from arbitrage. In terms of ranking, USDX is notable as one of the only “algorithmic” style stablecoins of significant size in the post-Terra era. It hasn’t exploded in popularity, but it found a niche among DeFi users looking for alternatives to fiat-backed coins.

Reliability and Historical Performance of Stables Labs USDX (USDX)

USDX has maintained its peg to $1 quite effectively so far, thanks to its design. By leveraging arbitrage and delta-neutral positions, USDX is kept very close to $1.00 – typically oscillating in a tight band (perhaps $0.998–1.001). The stability mechanism relies on market incentives rather than collateral redemption. In practice, if USDX ever drifts, automated arbitrage bots and the protocol’s own operations correct it. There have not been any major depegging incidents reported for USDX. It’s worth noting that in low-liquidity scenarios (like on a DEX with small pools), one might see slippage causing a temporary price of $0.99 or $1.01, but these are local effects, not a systemic peg loss. On centralized aggregators, USDX has consistently hovered around $1.00. The backing strategy (see below) inherently works to neutralize value shifts, so as long as their trading strategy performs as expected, USDX’s value remains stable. However, because USDX’s model is complex (involving off-chain trading), a point of potential risk is operational or counterparty failures. For example, if exchanges used for the delta-neutral trades have issues, it could in theory impact USDX’s backing. So far, no such events have occurred, and the team presumably manages risk by spreading positions. Another aspect is interest: USDX often slightly exceeds $1 in value accrual because of the yield it generates (when held in certain forms). This is similar to how an interest-bearing stable like sUSDS trades above $1 due to accrued yield. But in terms of redeemable value, USDX is kept at $1. The bottom line is that USDX has been reliable in holding its peg, demonstrating that algorithmic approaches (with proper collateral/trading strategies) can avoid the fate of past algo-stables as long as arbitrage is robust.

Type and Structure of Collateral Backing

USDX is best described as a synthetic algorithmic stablecoin with delta-neutral collateralization. According to Stables Labs, USDX is “backed by delta-neutral positions across multiple exchanges”. In practice, this means the protocol gathers funds (in crypto or fiat) and deploys them into a strategy that typically involves basis trading or liquidity provision that nets out market risk. For example, a common delta-neutral strategy is to deposit USD on one platform, take a long position in one market and an equal short position in another (or spot vs futures) – thereby locking in a yield from funding rate differences or market inefficiencies. The revenue from these strategies collateralizes the stablecoin and often generates yield. Stables Labs essentially acts like a fund: users who mint USDX are providing liquidity that the protocol uses in arbitrage trades (likely on CeFi exchanges or possibly DeFi). Because the positions are hedged, the principal is protected (in theory) and can redeem USDX 1:1, while the earnings make the operation profitable. USDX is thus not backed by static reserves of cash or crypto in a vault, but by active trading positions and the assets locked in those trades. The stability comes from the fact that as long as the trades are live, the protocol can unwind them to retrieve $1 worth of value for each USDX. It’s similar in spirit to USDe’s approach, but possibly involving a wider array of arbitrage (the Stables Labs website mentions “bridging DeFi, CeFi, and TradFi”). USDX is issued on-chain (Ethereum and others) as a token, but the backing operations straddle on-chain and off-chain. This requires trust in the operators and the exchanges used. That said, Stables Labs touts censorship-resistance and scalability without banks. USDX’s model can be seen as a “hedged trading-backed stablecoin”, which is a new category. It provides a stable unit without holding fiat, appealing to those who want to avoid centralized custody but still benefit from the relative stability of fiat value. In summary, USDX’s “collateral” is capital deployed in market-neutral strategies rather than traditional reserves – a novel approach that blurs the line between stablecoin and investment fund.

Regulatory or Ecosystem Developments

As an algorithmic-style stablecoin, USDX exists in a more ambiguous regulatory space. It is not explicitly a stored value instrument like fiat-backed coins, so it hasn’t been directly targeted by any regulators so far – likely because of its relatively lower profile and complexity. However, if it grows, authorities might scrutinize it as an unregistered investment product or similar, since users’ funds are effectively being traded. Stables Labs might mitigate this by decentralizing certain aspects or geofencing U.S. users, etc. In the ecosystem, USDX has steadily grown through DeFi channels. It’s been integrated into some yield farming and lending protocols where its delta-neutral nature is a selling point (users can hold USDX to earn some yield derived from its underlying strategies). Some DAO treasuries or crypto funds may also mint USDX to park idle cash in a presumably stable yet yield-generating form, rather than leaving it in plain USD. Community discussions have compared USDX to other upcoming synthetic stables and note it as part of the “stablecoin 2.0” wave focusing on on-chain/off-chain arbitrage. One development: in late 2024, Compound and other lending markets considered adding USDX as collateral (some proposals were floated), which indicates growing acceptance. Moreover, Stables Labs has been somewhat under the radar in media, possibly intentionally to avoid hype until proven. Technically, USDX seems to be working as designed, which can encourage similar projects. On the flip side, the collapse of Terra’s UST in 2022 still casts a shadow on anything algorithmic. USDX’s team likely is careful to distinguish their fully hedged, collateralized approach from Terra’s uncollateralized arbitrage mechanism. If they continue to demonstrate stability and publish transparency reports (they have provided some data on yields), confidence should build. One can foresee that as stablecoin regulations come, USDX might either have to register as a type of investment or operate more decentralized to avoid legal issues. Some jurisdictions might view it as a form of mutual fund or note. As of now, though, USDX flies below those thresholds. In the broader stablecoin market, USDX and similar “yield-bearing stablecoins” represent an innovative attempt to make stablecoins not just a store of value but also an income-generating asset. This aligns with the DeFi ethos of “money legos”, but regulators will likely watch to ensure it’s not misleading or risky. In conclusion, USDX has carved a quiet but notable spot in the ecosystem, proving a concept that stablecoins can be backed by clever financial engineering. Its growth will depend on sustained performance and navigating the fine line of compliance in various jurisdictions.

10. TrueUSD (TUSD)

TrueUSD (TUSD) is one of the older fiat-backed stablecoins, launched in 2018, which experienced a resurgence in 2023 but has since seen its market cap settle around $495 million by mid-2025. At its height, TUSD was once the fifth-largest stablecoin, even exceeding $2–3 billion in market cap during early 2023 when it was heavily used on Binance. However, its circulating supply declined after that peak. By 2025, TUSD remains in the top 10 but at the lower end, reflecting both reduced usage and strategic shifts by its issuers (and perhaps wariness by users given some controversies). Daily trading volume for TUSD is moderate, often in the tens of millions (e.g., ~$25–50M range), heavily dependent on Binance trading pairs. Indeed, Binance was a major driver of TUSD volume – at one point, Binance made TUSD the zero-fee asset for Bitcoin trades, temporarily boosting its volume dramatically. That program ended, and volumes normalized. TUSD is listed on many exchanges and used in some DeFi pools, but it doesn’t have the same ubiquity as USDT/USDC. Still, it serves as an alternative USD liquidity source, particularly when other stablecoins face issues. Its current rank around #10 underscores that role as a secondary stablecoin in the ecosystem.

Reliability and Historical Performance of TrueUSD (TUSD)

TUSD’s peg stability has generally been good, but recent history revealed some concerning depeg events. For years (2018–2022), TUSD held $1 with minimal deviation, supported by regular attestations of its 1:1 backing. However, in late 2023 and early 2024, TUSD began to lose its peg at times, dropping a few cents below $1. In November 2023, for example, TUSD traded around $0.997 – a small slip, but enough to raise questions. More dramatically, in January 2024, TUSD fell to about $0.97–0.98 at one point. Traders dumped over $100M TUSD in fear, seeking safer stables. It did recover back to $1, but the incident revealed cracks in confidence. The triggers for these depegs included fears over TUSD’s reserve transparency and its connections to crypto mogul Justin Sun. At one stage, TUSD even paused its real-time reserve attestations because of a “system issue” where liabilities appeared to exceed assets (the team claimed it was a reporting error). That understandably spooked the market until resolved. Additionally, in April 2023 and beyond, regulatory actions cast a shadow: the SEC charged the original issuers (TrustToken/TrueCoin) with misrepresenting TUSD’s backing and using reserves for risky investments without disclosure. Shockingly, the SEC alleged that by late 2022, 99% of TUSD’s reserves were invested in a speculative fund, not sitting in cash as claimed. While those charges were settled and pertain to the pre-2023 era (before TUSD’s ownership changed), it badly hurt trust. In summary, TUSD has generally maintained its peg, but trust in that peg has been eroded by several incidents. It has recovered from each depeg, thanks in part to arbitrage (and possibly intervention by its major holders), but it no longer enjoys the “boring stability” reputation of some competitors. Users and exchanges remain a bit cautious; for example, Curve’s 3pool briefly removed TUSD during uncertainty.

Type and Structure of Collateral Backing

TUSD is a fiat-backed stablecoin that claims full 1:1 backing by USD or equivalent assets – but as noted above, historical practices deviated from the ideal. Under the hood, TUSD is issued by an entity that (as of 2023) was linked to a firm called Techteryx (based in Asia) after being sold by the original TrustToken company. The reserves are supposed to be held in escrow accounts with banks, and TUSD pioneered publishing real-time attestations via an accounting firm (Armanino, and later The Network Firm) visible through a dashboard. These attestations would show the total TUSD minted and the funds held to back them. In theory, TUSD’s reserves should be in cash and short-term treasuries. However, according to the SEC’s 2024 complaint, the prior management secretly invested a large portion of reserves in an offshore fund, contrary to what was advertised. This means users were unknowingly exposed to that fund’s risk. By early 2023, TUSD’s operation was handed off to an Asian entity, and it’s believed that Justin Sun (of Tron) had significant influence or holdings in TUSD (he at least used TUSD heavily on his platforms). It’s not publicly confirmed if TUSD’s current reserves are all in cash/treasuries or still partly in other investments. The paused attestations incident raises questions. In late 2023, attestations resumed showing full backing, but confidence was shaken. Technically, TUSD operates on multiple blockchains (ERC-20 on Ethereum, TRC-20 on Tron, BSC, etc.) and has mechanisms for authorized partners to mint/burn via escrowed funds. Like other fiat stables, TUSD can blacklist addresses (and indeed has frozen funds at law enforcement requests in the past). One unique aspect: TUSD was closely integrated with Tron’s JustLend and other Sun-affiliated DeFi, where you could mint TUSD against collateral, blurring lines between fiat-backed and crypto-collateral issuance. By 2025, many assume TUSD is still fully backed by fairly liquid assets, but the lack of a trusted U.S. regulator or consistently reliable audits is a gap. In summary, TUSD’s backing structure is supposed to be simple – one dollar in the bank per token – but past mismanagement and changes in ownership have made it hard to verify. Current operators assert everything is proper, but trust is not as strong as with USDC or even USDT.

Regulatory or Ecosystem Developments of TrueUSD (TUSD)

Regulatory-wise, TUSD’s original issuers ran afoul of the SEC, as described. In September 2024, TrustToken and TrueCoin agreed to settle SEC charges of fraud and unregistered securities sales related to TUSD’s reserve misrepresentationssec.govsec.gov. They essentially got caught lying about being fully backed. Since they had already sold the TUSD business by then, the impact on TUSD going forward was indirect – but it certainly alerted everyone that something was wrong in late 2022. The new issuer (Techteryx or its affiliates) isn’t U.S.-based and thus operates outside U.S. purview for now. However, the SEC action underscores the risk of weak regulatory oversight when issuers aren’t transparent. Ecosystem-wise, TUSD was a beneficiary of BUSD’s downfall in 2023. When Paxos was ordered to halt BUSD issuance, Binance quickly leaned on TUSD – for a while, Binance auto-converted user holdings into TUSD and even used TUSD as the primary stablecoin for certain trading pairs. This spiked TUSD’s usage and price parity. But after the aforementioned depeg scares, Binance’s enthusiasm cooled; by mid-2024 Binance reduced zero-fee promos with TUSD and started supporting FDUSD and others as alternatives. TUSD’s market share thus retracted. Tron’s Justin Sun also made big moves with TUSD – he reportedly borrowed TUSD at scale and used it in various liquidity farming, and at one point rumors swirled that Sun was effectively controlling the majority of TUSD supply (leading to concerns if he faced legal trouble, TUSD could be affected). While these remain rumors, the association with Sun contributed to traders dumping TUSD when two of Sun’s exchanges (Poloniex and Huobi) were hacked in late 2023, fearing knock-on effects. That illustrates how perceptions can drive a stablecoin’s fate as much as fundamentals. In more positive developments, TUSD has remained integrated in many DeFi protocols (it’s often an option in lending markets and DEX pools) and the team attempted to regain trust by open-sourcing some code and improving attestations. Another development: TUSD branched out to launch tokens pegged to other currencies (like TAUD, TCAD in the past) – though those are niche. By 2025, TUSD finds itself in a somewhat precarious but stable position: it’s holding onto a top-10 spot, but with much scrutiny around its transparency. If it can demonstrate consistent, audited backing, it could remain a useful secondary stablecoin, especially in Asia. If not, users might continue migrating to coins like USDC, USDT, or newer ones like USD1/FDUSD for greater assurance. In summary, TUSD’s journey has been tumultuous – from a trusted early stablecoin to a tool of opportunistic market players and now under the cloud of regulatory revelations. Its future will depend on rebuilding credibility and perhaps aligning with stronger regulatory frameworks or partnerships.

Stay informed on further developments in the stablecoin arena (and the broader crypto market) by following real-time updates with Coin Push Crypto Alerts. Whether it’s a new regulatory change or a market movement affecting these top stablecoins, staying alert will help you navigate the ever-evolving landscape of digital assets.

Stablecoins Glossary

Stablecoin

A type of cryptocurrency designed to maintain a stable value, typically pegged to a fiat currency like the US dollar.

Fiat-backed

A stablecoin backed 1:1 by real-world currency reserves such as USD held in bank accounts or short-term treasuries.

Crypto-backed

A stablecoin collateralized by other cryptocurrencies, usually over-collateralized to account for crypto volatility.

Algorithmic Stablecoin

A stablecoin that maintains its peg using software-based monetary policy, often without full collateral reserves.

Over-collateralization

A risk management technique in which the value of the collateral exceeds the value of the issued stablecoins.

Depeg

A situation where a stablecoin trades significantly above or below its target price (usually $1.00), often due to panic or loss of confidence.

Peg

The fixed target value a stablecoin aims to maintain, typically $1.00 in the case of USD-pegged stablecoins.

Delta-neutral Strategy

A hedging approach where long and short positions offset each other to maintain a net neutral exposure to market movements.

PSM (Peg Stability Module)

A MakerDAO mechanism that allows users to swap DAI 1:1 with other stablecoins like USDC to help maintain its peg.

Real-world assets (RWA)

Traditional financial instruments like U.S. Treasury bills or bonds used as backing collateral for crypto-based products.

Smart Contract Risk

The risk of bugs or vulnerabilities in the code that governs decentralized applications and assets.

Redemption

The process by which stablecoin holders can exchange their tokens for the underlying fiat or collateral at a fixed value.

Liquidity

The ease with which an asset can be bought or sold in the market without affecting its price significantly.

Basis Trade

An arbitrage strategy involving long positions in spot assets and short positions in futures contracts to profit from price differences.

KYC (Know Your Customer)

A compliance process where users must verify their identity to access financial services, including stablecoin redemptions.

Stablecoins FAQ

1. What is a stablecoin and how does it work?

A stablecoin is a type of cryptocurrency designed to maintain a stable value, typically pegged to a fiat currency like the US dollar. It works by backing the issued tokens with equivalent reserves—either in cash, crypto, or algorithmic mechanisms—that keep its market price close to the intended peg, usually $1.00. This makes stablecoins useful for payments, trading, and storing value without exposure to crypto volatility.

2. What are the different types of stablecoins?

There are three main types: fiat-backed stablecoins (e.g., USDC, USDT) backed by actual cash or government bonds; crypto-backed stablecoins (e.g., DAI, USDS) which use over-collateralized cryptocurrencies; and algorithmic/synthetic stablecoins (e.g., USDe, USDX) that rely on trading strategies or software-based mechanisms to maintain price stability without holding dollars directly.

3. Are stablecoins really stable?

Stablecoins generally maintain their peg well, but not all are equally reliable. Major fiat-backed coins like USDC and USDT have mostly held their value, though they’ve experienced brief de-pegs during crises. Algorithmic stablecoins tend to be more volatile and riskier—some have failed catastrophically (e.g., TerraUSD). Ultimately, the stability depends on the structure, collateral quality, and market confidence.

4. Can I earn interest with stablecoins?

Yes, many platforms allow you to earn yield on your stablecoins through lending, staking, or depositing them into savings protocols. For example, depositing USDC into DeFi platforms like Aave or depositing USDS into the Sky Protocol may offer yields. However, returns vary and risks (e.g., smart contract bugs or liquidity issues) should always be considered.

5. How is a stablecoin different from a central bank digital currency (CBDC)?

Stablecoins are privately issued by companies or decentralized protocols and operate on public blockchains, while CBDCs are digital currencies issued and controlled by central banks. Stablecoins aim to be accessible and global, whereas CBDCs are national in scope and tend to have stricter regulatory controls and limited programmability.

6. What causes a stablecoin to lose its peg?

A stablecoin may depeg due to insufficient reserves, poor risk management, loss of user confidence, or external events like banking crises. For example, USDC briefly dropped to $0.88 during the 2023 Silicon Valley Bank collapse when some reserves were inaccessible. Algorithmic models are even more vulnerable if arbitrage mechanisms break down.

7. Are stablecoins safe to use?

The safety of a stablecoin depends on the transparency of its reserves, regulatory oversight, and smart contract security. Fiat-backed coins with regular audits (like USDC) are considered relatively safe. In contrast, algorithmic coins or those with unclear backing (like TUSD at times) may pose higher risks. It’s crucial to research the issuer and collateral model before using any stablecoin.

8. What is the most used stablecoin?

Tether (USDT) is the most widely used stablecoin globally, with over $140 billion in circulation and dominance in trading pairs across centralized exchanges. Despite controversies over transparency, its deep liquidity and multi-chain presence make it the preferred stable asset for crypto traders and users in emerging markets.

9. How do I convert stablecoins back to cash?

To convert stablecoins to fiat, you can sell them on centralized exchanges like Coinbase, Binance, or Kraken, which allow USD or EUR withdrawals. Some stablecoins like USDC or PYUSD also offer direct redemption through the issuer. Make sure your account is verified and linked to a bank to complete fiat withdrawals.

10. Will stablecoins be regulated in the future?

Yes, global regulators are increasingly focused on stablecoins due to their growing role in payments and finance. The U.S., EU, and Hong Kong are all proposing laws that would require stablecoin issuers to be licensed, hold high-quality reserves, and publish audits. Regulation is likely to favor fiat-backed, transparent stablecoins while phasing out unregulated or opaque models.