Stablecoin Market Trends and Report

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The top 5 stablecoin by market cap are $USDT, $USDC, $BUSD, $DAI and $UST respectively. The first 3 stablecoins are generally similar in that they are a form of fiat-collateralised stablecoin and have a centralised backing. The latter 2 stablecoins are a form of crypto-collateralised pegged stablecoin and are also considered to be decentralised.

• Tether ($USDT) remains the most adopted stablecoin in circulation. For the case of $USDT, Tether Limited claims to back $1 worth of Tether for every $1 of USD, although there have been some controversies regarding this claim. As of July 2021, Tether executives are under federal investigation. The market cap for $USDT started to flatten in Jun 2021, but nevertheless recorded growth of 54% in Q2 2021.
• USD Coin or $USDC is the 2nd largest stablecoin by market capitalisation. $USDC is governed by Centre, a membership-based consortium that sets technical, policy and financial standards for stablecoins. $USDC is issued by regulated financial institutions, backed by fully reserved assets and is redeemable on a 1:1 basis for US dollars according to Centre. In contrast with the decline in Tether's growth, we see a corresponding increase in $USDC's market capitalisation. $USDC market cap increased by a whopping 133% in Q2 2021, in comparison to Tether's 54%.
• Binance USD (BUSD) is the 3rd largest stablecoin by market capitalisation and is similarly a 1:1 USD-backed stablecoin issued by Binance (in partnership with Paxos), and is approved and regulated by the New York State Department of Financial Services (NYDFS). $BUSD is used in the Binance Smart Chain and has also seen an uptrend in its market cap.
• $DAI uses an over-collateralised mechanism to maintain a $1 peg of $DAI to USD. Unlike the 3 aforementioned stablecoins, $DAI is a form of crypto-collateralised pegged stablecoin and is decentralised. However, much of what collateralises $DAI involves $USDC. Critics argue this means that $DAI is backed by a centralised entity, making it susceptible to centralisation risks like the 3 stablecoins described above.
• $UST is the stablecoin used within the Terra ecosystem. The $LUNA token in Terra is used to support the $UST stablecoin peg. The market cap of $UST is relatively small compared to the top stablecoins because $UST is not widely used in other blockchains but only has utility within the Terra ecosystems in protocols such as Mirror and Anchor.