Top Non-USD Stablecoins and Why We Need Them
Stablecoins are cryptocurrencies pegged to stable assets such as FIAT currency or exchange-traded commodities. Stablecoins could be pegged to currencies such as the US Dollar, Singapore Dollar, Euro, Yen, etc. to avoid the otherwise rampant volatility of cryptocurrencies.
The stability of cryptocurrencies is crucial for mainstream adoption and practical use across industries. Price volatility can deter businesses and individuals from using cryptocurrencies, as it exposes them to potential losses. Stablecoins solve this problem as a stable digital currency bridging the gap between traditional finance and the crypto world.
This unique characteristic of stablecoins has made them increasingly popular particularly in decentralized finance or DeFi, where they are used to lend, borrow, and stake and used for payments as well.
Demand for Non-USD Stablecoins
While stablecoins have helped investors mitigate crypto market volatility, stablecoins have faced challenges due to an overall lack of regulation and transparency in the industry. In recent years, there have been instances of stablecoins losing their peg, resulting in substantial losses for investors. Also, there have been persistent concerns about the stablecoin reserves and assets backing them.
On the other hand, USD stablecoins are the most popular and have dominated the stablecoin market with over 95% of the entire market capitalization. However, the recent clampdown of USD stablecoin issuer companies by various authorities has fuelled further instability in the crypto markets. Keeping these factors in mind, a consolidated demand for non-USD-backed stablecoins has arisen within the crypto community.
Rise of Non-USD Stablecoins
While USD-backed stablecoins are here to stay for years to come, non-USD stablecoins could fill up any impending opportunities within the ecosystem.
Due to this huge demand for non-USD-backed stablecoins, a variety of stablecoins backed by other fiat currencies have been launched. Particularly, stablecoin issuance is gaining popularity in regions like Europe and Asia as central governments across these markets are taking steps to attract crypto and blockchain innovations in their respective countries. New as well as established players like Circle and Tether are expanding their product offerings by offering other fiat-backed stablecoins such as Circle’s Euro Coin and Tether’s Mexican Peso-backed MXNT.
Popular Non-USD Stablecoins
While the stablecoin market is dominated by USD-backed stablecoins like USDT and USDC, a smaller portion of this market is pegged by other currencies. These stablecoins, while still small in terms of market capitalization, are competing to grab more market share and establish themselves as an alternative to USD-backed stablecoins.
Here are the top non-USD-backed stablecoins:
Euros is a stablecoin pegged to Euro. It was developed by STATIS. This stablecoin is the world’s largest Euro-backed stablecoin with a market cap of over $133 million as of 7 September 2023, but it is very small compared to other USD-backed stablecoins.
Euro Coin (EUROC) is issued by Circle, the issuer of the second largest stablecoin by market cap USDC, following the same full-reserve model as USDC. EUROC is designed for stability and is 100% backed by Euro held in Euro-denominated bank accounts to maintain a peg of 1:1 with Euro.
XSGD is one of the largest non-USD stablecoins, pegged to the Singapore Dollar. Designed for stability, XSGD is issued by StraitsX and directly pegged 1:1 with the Singapore Dollar to offer a consistent price.
TRYB is a stablecoin pegged to the Turkish Lira to provide investors with a stable and safe way of interacting with DeFi and other decentralized financial instruments. TRYB issuer LiraB also provides an easy on-ramp and off-ramp platform for investors to easily cash out their TRYB. According to recent reports, TRYB, at one point surged to market capitalization of $136 million, way ahead of other non-USD stablecoins, making it the second largest non-USD stablecoin.
Stablecoins are an interesting innovation that provides a much-needed safe investment space for investors to mitigate the volatility of crypto markets. Earlier, crypto investors and traders had no way to lock in a profit or avoid volatility without converting crypto back into fiat. The creation of stables provided a simple solution to these issues.
While USD-backed stablecoins are currently the market leaders in terms of both popularity and market capitalization, the demand for non-USD backed is cannot be neglected. USD-backed stablecoins such as USDT, USDC, and others lead the market with around 95% share, the launch of non-USD-backed stablecoins would help the market find alternatives and create an inclusive and more balanced dynamic in terms of stablecoin dominance.