What the heck is a Stablecoin?

May 7

Written By Sushen

What is Scratching the Surface with Soosh? Its a new mini project of mine to provide some context to the world of crypto, finance etc in bite sized written format. As the name suggests, everything here is at surface level (i.e. no deep dives or extremely details/heavy datasets), just enough to get your curiosity to tingle~ so you can learn!

Today's topic: What is a Stablecoin?

A Stablecoin is a type of digital money (cryptocurrency) that is designed to always be worth the same as a real-world currency—usually the U.S. dollar.

What are some of the popular USD Backed Stablecoins?

USDT (Tether): The most widely used stablecoin, USDT is issued by Tether Ltd and backed by cash and Treasuries, primarily used for crypto trading worldwide.

USDC (USD Coin): Issued by Circle, USDC is a fully backed, transparent stablecoin popular in DeFi and institutional finance.

DAI: A decentralized, crypto-collateralized stablecoin managed by MakerDAO, DAI maintains its $1 peg through smart contracts without holding actual USD.

BUSD (Binance USD): Previously issued by Paxos for Binance, BUSD was a regulated, USD-backed stablecoin now being phased out under regulatory pressure.

PYUSD (PayPal USD): Backed by U.S. Treasuries and issued by Paxos for PayPal, PYUSD targets retail users for digital payments and Web3 integration.

GUSD (Gemini Dollar): A regulated, USD-backed stablecoin issued by Gemini, GUSD is mostly used within the Gemini platform and has limited external adoption

Why use Stablecoins?

Stability - Pegged to $1 for consistent value.

Speed & Cost - Near-instant, low-cost global payments.

Access - Dollar-like use globally without needing a U.S. bank.

Crypto-Fiat Bridge - Simplifies trading and movement between real money and crypto.

Programmability - Can be used in smart contracts for automation.

Transparency - Movement traceable; ideally backed by audits if well-managed.

Yield Earning - allows users to earn a Yield similar to how one would if they were to buy Treasury Bills.

Do Stablecoins have to be USD backed?

Technically no. Stablecoin is a representation of any asset that is 1:1 backed. Some examples of non USD stablecoins include Stabelcoins that are representing Gold, Silver, abd Other Currencies around the world.