Finding the Best Stablecoin – A Detailed Review

What makes Stablecoin so attractive? And should you choose USDT, BUSD, or another one? Here is a detailed review of everything you need to know about Stablecoins!

One of the biggest problems with cryptocurrencies is their rampant price volatility. Recently, a crackdown on crypto from Chinese authorities led to a huge decline in crypto prices. While veteran crypto traders can look at trends and make sound decisions about their investment portfolio, the same cannot be said about new investors.

For those of you looking to gain exposure to crypto but are worried about this volatility, Stablecoins might be just what the RugDoc ordered for you. Think of it like riding a bicycle with training wheels, but instead of it being a temporary solution, you can actually focus on some of the best Stablecoins out there and still earn rewards. But the reduced risk might also mean slightly reduced rewards.

Now, bicycles have been around since the 1800s, but it wasn’t until 1949 that training wheels came around and ‘revolutionized’ how we used the two-wheeler. Similarly, cryptocurrencies, such as Bitcoin and Ethereum, have significantly changed investors’ behavior, changed investment trends, people’s attitudes towards money, and more. Traditional investors don’t invest in crypto because of the price fluctuations but are more than willing to invest in Stablecoins.

In this article, we will go over the intricacies involved with trading this version of digital currency, along with some of the best Stablecoins out there. 

What Are Stablecoins?

As the name suggests, Stablecoin is a digital currency that maintains its value against an asset – most often fiat currency. This is done by backing it up with an asset (such as a valuable commodity or the US dollar itself). 

Stablecoins backed up by the US dollar maintain the value of the fiat currency but boast the features and flexibility offered by cryptocurrency. This allows investors to get access to an evolving class of assets and future-proof their portfolios. 

While the US dollar isn’t backed by gold reserves anymore, Stablecoins follow the same principle as the one implemented between 1880 and 1914, i.e., the Gold Standard Era

There are three main types of Stablecoins:

  1. Fiat-backed,
  2. Cryptocurrency-backed, and
  3. Commodity-backed Stablecoin.

All three Stablecoins are designed to maintain their fixed value online and after their conversion to fiat money. So, if you have 200 USDT, you could easily convert them into $200 without having to wait for “the perfect time.” For many investors, this property makes them feel secure as they modernize and diversify their portfolio.

Unlike traditional cryptocurrencies, Stablecoins have proven to be much more resilient towards market events and investor confidence. By buying these, you get to earn your cake and eat it, too without the fear of it being reduced in size when you actually take a bite. 

Different Types of Stablecoin

Before deciding on your ideal Stablecoin, you need to learn about different Stablecoins and the pros and cons associated with each type. 

Fiat-Backed Stablecoin

These Stablecoins have a fiat currency backing them up, such as the US dollar or British Pound (less common). One very popular example of this Stablecoin is Tether (USDT), the first Stablecoin in the market that introduced the largest market capital and was adopted widely. 

Tether is pegged one-to-one to the U.S. dollar; for every USDT, there is a US dollar in its reserve backing it up. For Tether, its reserve constitutes 3.87% as cash. Another example of a fiat-backed Stablecoin is USDC managed by Circle and Coinbase.

Fiat-backed coins can be converted into liquid cash easily, but there is also a risk associated with it. Just like fiat, there is a central authority trusted by all investors controlling the number of Stablecoins minted and the supply of fiat in the reserves against it; this goes against the concept of decentralization. There is an element of ‘trust’ involved, which was breached not too long ago. We’ll discuss this breach in a later section.  

The third-party entity controlling the fiat may shape the value of the Stablecoin as a result.

Crypto-Backed Stablecoin

Crypto-backed Stablecoins are stabilized with the help of a dynamic set of debt positions, automated feedback, crypto asset, and currency-based algorithms, and a range of external market factors. All these factors blend to stabilize the currency’s value, which may end up confusing the average investor if they try to look at trends and make financial decisions accordingly. 

A prime example of a crypto-backed Stablecoin is DAI (from MakerDAO). Here, Maker is a smart contract platform that uses the Ethereum network as its base. It collateralizes and stabilizes the value of DAI constantly investing and pulling funds out with respect to the factors mentioned above. The currency tries to maintain a value (on the Ethereum blockchain network) equal to that of the US dollar.

Investors are allowed to use their Ethereum assets to “farm” DAI on the platform without having to deal with an intermediary; hence the completely decentralized nature. However, the unreliability of crypto means there is only so much that the algorithm can do in the event of a Rug Pull or a drastic decrease in price. 

Commodity-Backed Stablecoins

The final type of Stablecoin is backed by precious metals and commodities, such as gold, silver, platinum, oil, gas, sugar, cotton, and more; this gives them a much higher degree of stability. By investing in these Stablecoins, you are in a way buying these commodities but on a crypto platform. 

The most common commodity-backed Stablecoins out there include Tether Gold and Paxos Gold. These coins are much more reliable since you purchase a bit of gold with each coin. However, their price fluctuates as well since commodity prices also increase and decrease. This price movement isn’t as volatile as crypto prices and sees differences over the long run. These Stablecoins are perfect for investors looking to hold assets for capital appreciation. 

Earning Money With the Best Stablecoins Out There

The crypto architecture of Stablecoins wouldn’t be complete unless you can earn from it as well. Stablecoins offer earning models much similar to non-collateralized currency, i.e.:

  • Earn interest on Stablecoins
  • Farm Stablecoins
  • Stake Stablecoins
  • Earn via price appreciation

One of the safest ways of earning that Stablecoin introduces is to hold your Stablecoins. You earn via price appreciation. For this, the best course of action is to invest in commodity-backed Stablecoins. For example, if you buy a Stablecoin backed by gold, you will essentially earn based on the price increase and decrease of gold. 

Think of it as buying gold on the stock market – or in real life. It’s a form of commodity trade. However, you won’t be able to earn like this with fiat-backed Stablecoin. 

For that, you can consider earning interest on your Stablecoins.  

You can also earn interest on Stablecoin balances by allowing your liquidity to be lent on decentralized exchanges (DEX) or lending groups. To earn interest on your Stablecoins, you will need to open an account with a cryptocurrency exchange, such as Kraken, Coinbase, and more. By holding your finances here, you get to accrue daily interest on your holdings.

This is an alternative investment strategy where you lend your cryptocurrency (and in turn, fiat money) to other borrowers and get interest payments and reward tokens in return; this is also known as yield farming. There are specific yield farms for Stablecoin. 

The rate of return can range from 5% to 12% or even more annually and is highly dependent on the liquidity and APY of a given farm. Remember, your annual percentage yield will be paid out in the Stablecoin you lent out.

Finally, you have the option to stake your Stablecoins. Apart from staking your currency and assets to ensure security for the blockchain, you will also be participating to maintain the proper flow of the blockchain network with respect to the asset backing up the coin. In return, you mint new currency on the same network or tokens.

It’s like cutting open a fruit to plant its seeds in the soil and earn more fruit in the future. The rewards can be new fruit and seeds with the added benefit of the shade the tree gives you. 

Finding the Best Stablecoin

Now that we have covered the basics, let’s go over some of the most popular Stablecoins out there and see which one is the best in our opinion.  

  1. USDT
Tether cryptocurrency logo.

Rating: 3.8/5

USDT, also known as Tether, is one of the most traded cryptocurrencies out there. Whether it’s for yield farming, staking, or lending, USDT offers quick conversion to USD, as every unit of the currency has $1 as collateral behind it. You can redeem it quite easily for a dollar, hence its popularity.


Tether was foundered in 2014 to provide a cryptocurrency that offers price stability to investors. Founded by Brock Pierce, Reeve Collins, and Craig Sellars, it was the first Stablecoin in the market.

Brock Pierce smirking while taking his photograph.
Brock Pierce
Reeve Collins with a cheeky smile showing his dimples on both sides.
Reeve Collins
Craig Sellars smiling cheerily while resting his face using his hand full of bands.
Craig Sellars

Tether found extensive use when it became difficult for exchanges and companies to maintain sovereign currency in their reserves, as the exchanges needed a license. If traders were to accept cryptocurrency as their go-to currency, they needed something that could easily be converted from crypto and fiat and vice versa. 


There have been quite a few controversies in regards to the tokens issued by Tether Limited and the amount of its circulating supply being backed by fiat or commodities. The company is controlled by Tether owners, but they report to the owners of Bitfinex, which, in turn, is owned and controlled by Hong Kong-based iFinex Inc.

Date of Release 

Tether was first launched as RealCoin in July 2014. However, over the next few months, it was rebranded as Tether. The coin officially changed its logo and name in November. Trading for this Stablecoin started in February 2015.

Market Cap

The total market capital of Tether (USDT) is $62.245 billion as of July 1, 2021. The circulating supply out of this is $62.21 billion with a volume of 37.6 billion (37,616,799,744) units. 

Audit Report Highlights

Tether relies on the independent auditor Moore Cayman, in which the firm reported that more than 100% of its liabilities are backed up with collateral. This information was disclosed after a scandal involving the stable currency where $33 million USDT was frozen after the KuCoin hack. 

The issue was not the hack but the information the hack revealed. It was found that Tether has a very centralized currency system. A misappropriation of funds lawsuit was filed against tether, where the Attorney General of New York suggested that it doesn’t have enough assets to back the Stablecoins issued. The auditor’s report showed that on February 28, 2021, Tether’s assets amounted to $35.2 billion against liabilities against Stablecoin issuance stood at $35.1 billion. Hence, the case was settled.

According to the settlement terms, Tether was supposed to provide more transparency in terms of its assets against the liabilities. Despite the scandal, USDT is considered to be the best cryptocurrency ecosystem to trade on when it comes to Stablecoin. 

  1. USDC
USD Coin cryptocurrency logo.

Rating: 4.5/5

Tether is followed soon after in terms of Stablecoin popularity by USDC (or USD Coin). It is also collateralized by the US dollar and uses the Ethereum, Stellar, Algorand, Hedera Hashgraph, and Solana blockchains for its operations. USDC also focuses on high-speed and cheaper transactions, reducing volatility, specifically for Bitcoin. 


USD Coin was founded by Centre and Circle and has been particularly successful in terms of the versatility and features it offers. It started off simply as collateralized currency but soon evolved to be integrated with day-to-day operations as well. 

It wasn’t until March 29, 2021, that the founding company Circle announced its partnership with Visa. This announcement was a huge step towards combining crypto and fiat transactions, leading to a boom in the number of Stablecoin in circulation. 


USD Coin is owned and managed by Centre, a consortium formed by Circle. However, that’s not the extent of USDC’s management expertise. The prime reason behind the immediate success of this Stablecoin is the expertise provided by Coinbase and Bitmain.  

Date of Release 

The collateral-based currency was first announced on May 15, 2018, and launched in September of the same year. With time, the currency spread far and wide because of the transactional security and speed it offered. 

Although a relatively new currency, USDC has been welcomed with open arms into the market. 

Market Cap

As of July 9, 2021, the total market capital for the Stablecoin stands at $25.9 billion. All of this is currently being circulated with a volume of 1.9 billion (1,873,070,592) units. 

Audit Report Highlights

Circle and all its ventures have always received glowing recommendations and attestations from independent auditing firms in strict contrast to USDT, its direct competitor. According to the report, the reported balance of Circle’s bank account was $1,873,162, 240, while the total USDC minted to date was smaller $1,873,070,592.

The documents presented upon requests were indeed accurate according to GratThornton accountants, hence presenting no controversy and therefore being more preferred by investors. 

  1. BUSD
BUSD crytocurrency logo.

Rating: 4.5/5

Another fiat-backed Stablecoin that uses the US dollar to maintain a stable market value, BUSD focuses on low volatility in the short- and long-term while being fiat-backed. The primary audience of this currency includes investors and traders who want to hold on to assets but don’t want to invest in commodities. 


The Stablecoin was launched in September 2019 and issued by Paxos, a financial institution based in New York. The project was led by Charles Cascarilla, the CEO and co-founder of Paxos, at the time. It was a result of Paxos partnering with Binance. 

BUSD Stablecoins are issued on the Ethereum blockchain (ERC-20). Every 1 Binance USD is backed up by a single USD  held in Paxos-owned US bank accounts. BUSD is approved by Wall Street, similar to GUSD and PAX.

Market Cap

As of July 1, 2021, the total market capital for BUSD stood at $10 billion. It has a market capital dominance of 0.74% with that capital, boasting a circulating volume of $10,356,671,284.

Audit Report Highlights

The one-year anniversary of BUSD was proof of this Stablecoin’s success. Paxos and BUSD were both subjected to regular audits to ensure the required reserve is present. After several surveys, it was found that BUSD is indeed issued on a 1:1 basis. It was found that the company can mine over 1 billion BUSD in just 261 days, making it the fastest-ever Stablecoin. 

BUSD is regularly audited to contribute towards a more stable currency and has very good liquidity with over 90 pairs on Binance. In fact, the report suggested that it is more stable than other Stablecoins. 

  1. TrueUSD
True USD logo.

Rating: 4/5

TrueUSD is an ERC20 Stablecoin backed by fiat and verified by third-party attestations. It is also considered to be one of the safest Stablecoins in the markets, particularly because of the transparency it offers. 


This Stablecoin was introduced in 2018 when the idea of Stablecoin was at its peak. The coin was launched via Trust Token as it continued to tokenize real-world assets onto the platform. Over the years, it has found extensive use because of its low fees and lower traffic at the time. 


Founded in 2018 and headquartered in San Francisco, TrueUSD is co-founded by Danny An, Rafael Cosman, Tory Reiss, and Stephen Kade. 

Danny An with a slight smile on his face while taking a his photograph over a black background.
Danny An
Rafael Cosman staring seriously while having his photograph taken on a black background.
Rafael Cosman
Tory Reiss smiling lively in the outdoors.
Tory Reiss
Stephen Kade wearing glasses. Half of his face is not visible due to the black background where he took his photograph.
Stephen Kade

TrueUSD also follows a 1:1 ratio and is the first cryptoasset built entirely on the TrustToken platform. 

Market Cap

The market cap for TrueUSD stands over $1.5 billion at a 1:1 ratio as of July 12, 2021. The circulating supply for the Stablecoin is 1,500,038,761 TUSD with a 24-hour trading volume of $88,646,366.57. The current market rank for TUSD is 56 in terms of its traded volume and dominance, which is just 0.11%; this is because TrueUSD doesn’t offer any specific edge that the others don’t. 

Audit Report Highlights

Just like its competitors, TrueUSD shows that the Stablecoin is currently backed against every coin minted in its reserves. The report was published by the independent firm Cohen & Company, showing a balance of $1,500,039,761. This amount is slightly over the tokens issued and currently in circulation, thus showing that the currency is reliable. 

The reserves include cash and cash equivalents and, according to the founders, may also include other assets from time to time. The fact that TrueUSD backs the currency up with anything other than US dollars is a topic for debate by the TrueUSD community members, as they suggest that it impacts the coin’s legitimacy. 

  1. DAI
DAI crytocurrency logo.

Rating: 4/5

DAI is a foreign cryptocurrency whose value fluctuates slightly but remains around the $1 mark. The platform manages to keep its value as close to $1 as possible with the help of an automated system that buys or sells smart contracts with respect to the value change in fiat. Despite the slight fluctuations, DAI is considered a very good investment as it can easily be converted into fiat via a Visa card. 


Founded in 2014 by Danish entrepreneur Rune Christensen, it works on smart contracts on the main Ethereum network. It is developed by the Maker Foundation and was launched to the public officially on Ethereum on December 18, 2017.

Rune Christensen with a serious facial expression. A small mic is clipped on his light purple polo.
Rune Christensen

Owner Company

Founded by MakerDAO, the goal of this Stablecoin was to eventually create an unbiased financial system that treats everyone equally, and it is well on its way to doing so. At any given time, there are a large number of mechanisms at work with DAI. 

Market Cap

As of July 12, 2021, the market cap for DAI Stablecoin stood at $5.5 billion ($5,499,416,051.60). With an exchange rate of $1 per unit, the circulating supply for DAI as of July 2021 is $3,637,574,782.

Audit Report Highlights

Dai has been audited by three independent auditors. While there were no issues with the amount kept for backing up the currency, the same could not be said about the security audit. The Callisto Network performed its security audit and reported four issues in total.

Out of these four, three were low severity and one presented an owner privilege issue, i.e., the ability to manipulate smart contracts. This presents a security threat for the investors if they aren’t careful. Having said that, there were no critical security issues reported. 

The security auditing manager of Callisto reported that the smart contracts can be deployed as is without any critical dangers. 

Partially-Collateralized Stablecoins

The review above shows that a completely backed Stablecoin is much better than those that aren’t in terms of security and stability. In many instances, platforms have collateralized assets amounting to more than the value of assets they have as a contingency. 

But what if a company has a collateralization ratio of less than 100%? This type of currency is known as a fractional Stablecoin. This Stablecoin has only a fraction of its total value collateralized and is said to be an efficient way for a platform to scale. There is little capital that remains idle in this case, which means more profitability. 

Traditional banks operate in a similar manner. For example, a bank may have $5 million in one branch on paper, but if you look at their vaults, you will only find a fraction of that within. The rest is invested somewhere for profit so only a small amount sits idly while the rest ensures profitability. It is practically free money. 

A man smiling mischievously while his eyes speak playfulness. The "Its free money" text was placed in the lower part of his image.

However, these partially collateralized Stablecoins may not be as ‘stable’ as the name suggests since there is nothing backing them up; this defeats the whole ‘Gold Standard’ structure Stablecoins have going for them.  

Would You Go For Stablecoins?

There are many Stablecoins out there, each offering something different. The best Stablecoin for you would be the one that suits your needs. For example, if you are looking for transparency and strong backing, BUSD or USDC might be best for you. If you aren’t as worried about reliability but are more geared towards versatility, USDT might be the way to go for you, and so on. 

While the price of Stablecoin will remain stable for years to come, what if the money that is backing USDT or BUSD ends up losing its value? The dollar is currently losing its purchasing power, and Stablecoins may follow the same path. Hence, commodity-backed Stablecoins might be better. Which one do you think is the best Stablecoin? Get in touch with us on Twitter or Telegram, and let’s stabilize our portfolio together!


🟢 For owners who have made impactful changes and would like an update to their farm review:

1️⃣ Use #update at @RugDocChat with your description and proof of changes and it will be forwarded to our scanners.

2️⃣ This does not guarantee a change in your review.

3️⃣ Owners who have difficulty solving the issues can consider our Consultation Package – please contact @BaymaxCrypto on Telegram to discuss.

Our mission here at RugDoc is to screen for hard rug code that results in 100% theft of ALL underlying funds for ALL participants.

This is the ONE part of the due diligence process that most people cannot simply do on their own as it costs thousands of dollars to hire a senior solidity developer to look over a farm for safety.

A project coin with terrible code can go up in price, and a project with good code and a good team can also go down in price.

Do NOT use our ratings to refer to your likelihood in making money if you invest in the project. They are ONLY in reference to code safety.

Everything else beyond code safety is YOUR responsibility to go do research on. We just make sure the casino you’re betting in won’t rob you before you even get to place a bet.

Our reviews for projects are organized into a few colors.

🟢 Least Risk
These projects are the least likely to hard or soft rug. Usually reserved for cornerstone projects of an ecosystem where it makes no financial sense for them to rug in any manner as they make more money just being legit.

🔵 Low Risk
These projects are usually established projects in an ecosystem that have a track record of success or have KYC’d to us or other authoritative sources in the real world. As a result, it is extremely unlikely for them to soft rug or hard rug their projects. The projects can still fail and the token price can go down, but usually more as a result of natural market forces.

⚪️ Some Risk
This is the default rating for projects with unknown teams but have code that is unlikely to have hard rug risk. Since the team is unknown and doesn’t have a track record of success, it’s entirely possible that they may try to soft rug by dumping tokens, abandoning the project, etc. Even a last minute contract swap to a malicious contract is possible. The only thing that is unlikely is a complete hard rug as long as you are 100% sure you deposit into the contract we review.

🟠 Medium Risk
Similar to Some Risk, but the underlying code itself is custom enough or complex enough that it warrants an elevated risk rating that needs deeper research. Make sure you read every point presented to make sure you’re comfortable with that before entering. Still unlikely to hard rug, but more chances of custom code behaving incorrectly and causing other issues.

🔴 High Risk
Project contains code or practices that are HIGHLY LIKELY to lead to catastrophic losses as they are right now. Make sure you read the description carefully as we will always warn what these issues are. If you see the words Hard Rug anywhere in the review, STAY FAR AWAY!

⚫️ Not Eligible
We reserve the right to not review exceedingly complex projects that would require tens of thousands of dollars of senior security analyst man hours. Typically these are projects that deal with leverage, lending, options, derivatives, and anything that is overly complex and which requires tons of peer reviews and audits from top audit companies.