Stablecoin FAQ
Straight answers to common questions. No fluff.
What is the safest stablecoin?
USDC is the safest stablecoin for most people. It's backed 1:1 by cash and short-term US treasuries, with monthly audits from a major accounting firm. Circle, the company behind USDC, is regulated in the US and publishes reserve reports. If you want peace of mind, USDC is the answer.
What is the best stablecoin?
USDC is the best choice for most people who want safety and simplicity. USDT has the most liquidity and is best for trading or sending money to emerging markets. DAI is the best decentralized option if you want something not controlled by a single company. The 'best' depends on what you need.
What is USDC?
USDC (USD Coin) is a stablecoin pegged to the US dollar. Each USDC is backed by $1 in reserves held by Circle, a regulated US financial company. It's the second-largest stablecoin by market cap and widely accepted across crypto exchanges and DeFi platforms.
What is USDT?
USDT (Tether) is the largest stablecoin by market cap and trading volume. It's issued by Tether Limited and claims to be backed by reserves including cash, bonds, and other assets. USDT is accepted almost everywhere in crypto, especially on trading platforms and in emerging markets.
Is USDT safe?
USDT carries more risk than USDC. Tether has faced regulatory scrutiny and questions about its reserves. It doesn't publish full audits, only attestations. That said, USDT has maintained its peg through multiple market crashes. Many traders use it daily without issues. It's riskier, but not unsafe for short-term use.
USDC vs USDT - which is better?
USDC is better for safety and transparency. USDT is better for liquidity and availability. Choose USDC if you're holding long-term or want regulatory compliance. Choose USDT if you need maximum trading pairs or are sending money to places where it's more accepted.
How do stablecoins maintain their peg?
Different stablecoins use different methods. Fiat-backed stablecoins like USDC and USDT hold dollar reserves. When you buy, they mint new coins. When you redeem, they burn coins and give you dollars. This arbitrage keeps the price at $1. Algorithmic stablecoins use smart contracts and incentives instead, but these are riskier.
What are the risks of stablecoins?
The main risks are: issuer bankruptcy or fraud, regulatory action, reserve mismanagement, smart contract bugs, and depegging events. Even 'safe' stablecoins aren't risk-free. USDC briefly dropped to $0.87 in March 2023 when Silicon Valley Bank collapsed. Always understand what backs your stablecoin.
Can stablecoins lose their value?
Yes. Stablecoins can depeg from $1. UST collapsed to near zero in May 2022. USDC dropped temporarily during the SVB crisis. Even USDT has traded below $1 during market panics. Well-managed, fully-backed stablecoins recover quickly. Algorithmic ones can fail completely.
Which stablecoin has the highest yield?
Yields change constantly and depend on the platform, not the stablecoin itself. You earn yield by lending stablecoins on DeFi protocols or centralized platforms. Higher yields mean higher risk. A 20% APY sounds great until the protocol gets hacked. Stick to established platforms and realistic rates.
Still have questions?
Start with our beginner's guide or compare all stablecoins side by side.