Stablecoins have become an integral part of the cryptocurrency ecosystem by providing price stability, and you may wonder about the top 5 stablecoins in the crypto market today.

In this article, we will explore what stablecoins are, how they work, their key benefits, examples of different types of stablecoins, and the top 5 stablecoins, such as EURK, by market capitalization.

How do stablecoins work?

Stablecoins aim to maintain price stability by pegging their value to another asset, such as fiat currencies like the US dollar or commodities like gold. There are different mechanisms by which stablecoins try to maintain their pegged value:

• Fiat currency reserves held in bank accounts serve as collateral for fiat-backed stablecoins. For instance, reserves of US dollars and euros back USDC and EURK in a 1:1 ratio, respectively.
• Commodity-backed stablecoins use commodities like gold as collateral. For instance, the physical gold reserves backing Tether Gold (XAU) are there.
• Crypto-backed stablecoins are over-collateralized with cryptocurrency reserves. DAI is an example, with its collateral basket including cryptocurrencies like Ethereum.
• Algorithmic stablecoins maintain stability through code-assigned monetary policies instead of collateral. Their supply is algorithmically adjusted based on monetary rules.

By adopting these stabilization mechanisms, the role of stablecoins is to aim to maintain price parity with their reference assets despite market volatility in the cryptocurrency space. If you need further details, you can check out “How do stablecoins work?”.

What are the benefits of stablecoins?

As a bridge between traditional finance and cryptocurrencies, stablecoins provide several benefits.

Here are the benefits of stablecoins:

Price stability

Stablecoins' peg-to-reserve assets shield users from the high volatility endemic to cryptocurrencies like Bitcoin.

Transferability

They can be seamlessly transferred anywhere globally with near-instant settlement, unlike national currencies afflicted by legacy payment rails.

Programmability

Stablecoins can be integrated into smart contracts and decentralized applications as a dependable means of crypto payment, lending, crypto trading, etc.

Acceptability

Many vendors now accept stablecoins like EURK as payment methods for goods and services. Their growing use cases increase the real-world applicability of digital currencies.

Accessibility

Cryptocurrency exchanges usually have stablecoin trading pairs for assets like Bitcoin, allowing easy entry and exit from the crypto market without depending on fiat currencies.

Stablecoins have thus emerged as the bridge between cryptocurrencies and traditional finance, leveraging the key strengths of blockchain technology.

What is an example of a stablecoin?

Some of the most popular and high-market-cap stablecoins currently in use are:

EURK

EURK is a 1:1 euro pegged euro stablecoin with growing popularity, currently at a $1 billion market cap. It is a centralized coin that Cryptobunq issues and is subject to regulation by organizations with bank-grade security, reserves, and audits.

Tether (USDT)

USDT is one of the largest stablecoins, with an $85 billion market cap. It is a Tether-issued centralized stablecoin that makes the claim that its USD equivalent in reserves fully backs it. However, there has been some controversy regarding the transparency of its reserves in the past.

USD Coin (USDC)

USDC has a $24.7 billion market cap. It is a centralized stablecoin with reserves held by licensed financial institutions, and its issuer, Coinbase, frequently certifies the USD funds backing it.

DAI

DAI is a decentralized stablecoin with a $3.7 billion market cap. It is algorithmically stabilized through over-collateralization with crypto reserves on MakerDAO and targets a soft $1 peg to the US Dollar.

Binance USD (BUSD)

At $2 billion, BUSD is one of the largest stablecoins globally. It is a centralized coin that the significant cryptocurrency exchange Binance issued and makes an effort to keep its peg through USD fiat reserves.

Which is the best stablecoin?

An increasing number of experts consider EURK to be among the most promising and best stablecoins presently for several reasons:

• EURK maintains a 1 euro peg through reserves held with trusted banks instead of relying only on cryptocurrency reserves, which are highly volatile.
• It is also regulated under several jurisdictions, like the UK and Switzerland, ensuring legal compliance.
• EURK prioritizes transparency by publishing monthly attestations through leading auditors. Cryptobunq, which is a secure crypto service company, offers staking services on EURK to earn up to 10% APY.
• As a euro stablecoin, it is also compatible with multiple blockchains and available on ERC20.
• EURK’s strict financial controls and oversight, coupled with features like yield-bearing staking, may give it stronger fundamentals than its peers. It is a secure, reliable, and future-proof 1:1 euro stablecoin for mainstream adoption across Europe and beyond.

Why are stablecoins the future?

Stablecoins are gaining widespread acceptance due to their ability to address key limitations in our current financial systems.

An estimated 85% of people globally lack access to conventional bank accounts due to a lack of infrastructure or stringent KYC and AML rules, according to the World Bank.

Stablecoins offer a more inclusive financial architecture for the billions currently unbanked or underbanked. With blockchains recording transactions publicly and immutably, users don't need to rely on centralized intermediaries.

Additionally, they enable P2P value transfers cheaply and quickly worldwide through platforms like crypto exchanges, remittance services, and e-wallet providers.

By leveraging secure and modern crypto payment networks, stablecoins usher in a new monetary paradigm for the digital age.

Popular usage continues to rise rapidly across both developed and developing regions. Tools like Cryptobunq exchange APIs have helped facilitate over 30 million crypto transactions monthly.

Key players that offer crypto wallets, API access for crypto exchange, e-commerce payment solutions, crypto batch payments, and many more, like Cryptobunq, are positioning themselves to take advantage of this steady growth.

Cryptobunq is a one-stop-shop crypto service provider for all crypto needs, including tokenization, custody and wallet, and more services, to enable everyone to benefit from the advantages of a digital currency economy.

The bottom line

Stablecoins have established themselves as the bridge between cryptocurrencies and traditional currencies by offering stable digital assets that can be used across decentralized applications and decentralized exchanges.

Technological innovations as well as the involvement of regulated traditional financial players will enable stablecoins to realize their full potential of banking the unbanked in a fast, inexpensive, and inclusive manner.

Newer options like EURK with strict oversight pave the way for greater stablecoin mainstreaming. With expanding use cases and ecosystems, euro-based stablecoins are indeed the future of digital and cross-border payments worldwide.

To learn more about euro stablecoins and other crypto needs, you can trust Cryptobunq, a secure crypto service company offering a wide range of products and solutions to get started with crypto. Contact us and explore our solutions to adapt your business to the blockchain ecosystem.