The price of crypto can be volatile. From great profits to great losses, all in a short period of time. But would you rather avoid this risk? Then you can always invest in stablecoins. These are cryptocurrencies that are pegged to a particular currency to keep their price stable. Discover our top 5 stablecoins here.

1. USD Coin (USDC)

USD Coin, better known as USDC, is a popular stablecoin designed by Circle in collaboration with Coinbase. USDC is pegged to the U.S. dollar. Therefore one USDC is always the same value as one US Dollar. This means that for every USDC, one dollar must also physically exist in their reserves. Are you curious about USDC reserves and collateral? Circle provides transparency. Every month they publish audits conducted by Grant Thornton. This is one of the world's leading accounting firms.

USDC was originally designed as an ERC20 token in Ethereum's network, but has since expanded to various networks such as Solana and Algorand.

2. Binance USD (BUSD)

BUSD is another popular stablecoin that is linked to the U.S. dollar. Binance USD was created in partnership with Paxos. Not entirely surprisingly, BUSD is designed to provide Binance users with an easy way to access its own stablecoin. Because of this, BUSD has good liquidity, meaning it is easy to trade on Binance's platform. Trade BUSD for your favorite cryptocurrency or other fiat currencies such as the Japanese yen or the euro.

3. Tether (USDT)

Tether is, like other stablecoins, linked to the U.S. dollar. The stablecoin is issued by Tether Limited, a company based in the British Virgin Islands. USDT was created to enable trading between blockchain protocols and fiat currency. It also offers transparency, stability, and low costs for anyone using USDT. Based on the current market cap, Tether is the largest stablecoin.

4. DAI (DAI)

DAI is a stablecoin issued by MakerDAO. Unlike other stablecoins, DAI is backed by a Collateralized Debt Position (CDP) on Ethereum's blockchain. To create new DAI tokens, users deposit cryptocurrencies, such as Ether, into a Maker Vault. These tokens are locked in a smart contract and serve as collateral.

This means that the value of DAI is directly linked to the value of Ethereum, which serves as collateral. So one DAI always equals one U.S. dollar, while DAI is not backed by the dollar. So how do they keep the price stable? MakerDAO provides the underlying value of DAI, while smart contracts on Ethereum ensure that DAI maintains its value, which is one dollar.

5. Pax Dollar (USDP)

The stablecoin Pax Dollar (USDP) is part of the Paxos ecosystem. In 2021, Paxos changed its original stablecoin, called PAX, to the current USDP. Again, the Pax Dollar has a ratio of 1:1 with the U.S. dollar. In addition, the stablecoin must also comply with rules and legislation required by the New York State Department of Financial Services (NYDFS). This means that—according to Paxos - users can be confident that their assets are safe and meet all standards, such as the 1-to-1 coverage.

When Paxos issues new USDP tokens, they store U.S. dollars and USD equivalents. For this purpose, they use the Paxos US Treasury Bills. External accounting firms monitor the balance and also provide transparency with audits.