We are happy to announce that the king of stablecoins – USDT (Tether) – along with other stablecoins, are now tradable via fox.exchange!
But what is a “stablecoin”? Let’s take a closer look.
What Is a Stablecoin?
According to investopedia.com, stablecoins are a new class of cryptocurrencies that attempts to offer price stability and are backed by a reserve asset. Stablecoins have gained traction as they attempt to offer the best of both worlds – the instant processing and security or privacy of payments of cryptocurrencies, and the volatility-free stable valuations of fiat currencies.
Key features of Stablecoins:
- Stablecoins are cryptocurrencies that attempt to peg their market value to some external reference.
- Stablecoins may be pegged to a currency like the U.S. dollar or to a commodity’s price such as gold.
- Stablecoins achieve their price stability via collateralization (backing) or through algorithmic mechanisms of buying and selling the reference asset or its derivatives.
While Bitcoin remains the most popular cryptocurrency, it tends to suffer from high volatility in its valuations. For instance, it rose from the level of around $5,950 in November of last year to above $19,700 in December and then declined by around two-thirds to the level of $6,900 by early February. Even its intraday price swings can be wild; it is common to see the cryptocurrency moving in excess of 10 percent in either direction within a span of a few hours.
This kind of short-term volatility makes Bitcoin and other popular cryptocurrencies unsuitable for everyday use by the public. Essentially, a currency should act as a medium of monetary exchange and a mode of storage of monetary value, and its value should remain relatively stable over longer time horizons. Users will refrain from adopting it if they are not sure of their purchasing power tomorrow.
Ideally, a crypto coin should maintain its purchasing power and should have the lowest possible inflation, sufficient enough to encourage spending the tokens instead of saving them. Stablecoins provide a solution to achieve this ideal behavior.
Stablecoins supported by fox.exchange
Currently, fox.exchange supports these stablecoins:
- USDT – new!
Let’s take a closer look at each one of them.
Referencing to the cryptonews.com, USD Coin (USDC) is a relatively fresh stablecoin pegged to the US dollar. It was launched on September 26, 2018, in collaboration between Circle and Coinbase. USDC is an alternative to other USD backed cryptocurrencies like Tether (USDT) or TrueUSD (TUSD).
In a nutshell, USD Coin is a service to tokenize US dollars and facilitate their use over the internet and public blockchains. Besides, USDC tokens can be changed back to USD at any time. The execution of issuing and redeeming USDC tokens is ensured with an ERC-20 smart contract.
Bringing US dollars on the blockchain allows moving them anywhere in the world within minutes, and brings much-needed stability to cryptocurrencies. Also, it opens up new opportunities for trading, lending, risk-hedging and more.
In general, stablecoins like USDC are used to:
- Short cryptocurrencies without cashing out and make it easier to buy cryptocurrencies in the future.
- Avoid traditional financial instruments and institutions.
- Avoid hyperinflation (for people living in countries like Venezuela or Turkey).
- Send money instantly, globally, securely and at low cost.
- Purchase items in various crypto decentralized apps, exchanges, and blockchain-based games.
TUSD (TrueUSD) was designed to be a simple, transparent and reliable stablecoin. For this reason, it doesn’t use a hidden bank account or any special algorithm.
TrueUSD’s US dollar holdings are distributed in various bank accounts that belong to different trust companies. The involved parties have signed an agreement to publish the collateralized holdings daily and conduct monthly audits. The token uses multiple escrow accounts to lower counterparty risk and provide holders legal protection against theft.
Some of the key properties TUSD offers are:
- Legal Protection: The token holders are provided with regular attestations and strong legal protection with the help of escrow accounts.
- Redeemable for USD: An individual or an institute is allowed to redeem TUSD for USD after getting a verified account on TrueCoin that has also passed a standard AML/KYC check. During the present alpha version, as of June 2018, there is a $10,000 minimum redemption requirement. The amount is targetted at institutional users, while the platform is aiming to reduce the minimum amount for retail users in the future.
- Trustworthy Fund Management: TUSD’s legal framework allows you to exchange USD with escrow accounts directly, rather than sending or receiving USD from any escrow accounts in TUSD’s network of banking and fiduciary partners for purchasing or redeeming TUSD. This also reduces the risk of a counterparty which is common in other projects of the collateralized stable coin.
- Full Collateral: A TUSD is always completely collateralized by USD, which is held in the escrow account of the professional trust company. The TUSD is minted by the publicly audited smart contracts when an escrow account is cleared by USD and it burns TUSD when the USD is redeemed in order to ensure a 1:1 parity amongst the USD in escrow accounts and TUSD in circulation.
- Regular Attestations: The holdings of an escrow account are regularly published and are subjected to ongoing professional attestations. The platform undergoes independent third party evaluations regularly by the leading auditors like Cohen & Co. for ensuring best possible security practices.
PAX is a new digital asset that is always backed 1:1 for the US dollar. It’s issued by the Paxos Trust Company, so the funds are carefully protected, audited and regulated.
The Paxos website emphasizes the following features of PAX:
- Regulation. Paxos is regulated by the New York State Department of Financial Services.
- Guaranteed cash deposits. Every collateralizing deposit is held at FDIC-insured U.S. banks.
- Audited. Every Paxos Standard bank account is overseen by U.S. auditing firm Withum.
- Security. Paxos employs additional transaction monitoring and surveillance partners for an extra layer of compliance.
- Daily purchase and redemption windows. PAX tokenization and redemption requests are processed in regular windows that facilitate free and frequent fund movement. Every operation is usually done within one business day
- No fees. Paxos Standard tokens are issued and redeemed without any extra charges.
These features make PAX like the other recently emerged stablecoins – USD Coin (USDC) and TrueUSD (TUSD). All of them are fully redeemable regulated ERC-20 tokens backed 1:1 which are backed by U.S. Dollars, uses Ethereum smart contracts to issue and burn tokens, and are overseen by the U.S. auditors and regulators. Besides, none of these platforms charge transaction/conversion fees (despite few exceptions).
The most significant difference between PAX and its rivals are different partner organizations and more efficient operations due to its “processing windows”, which boosts their transaction speed.
In short, DAI is a decentralized stablecoin created by MakerDAO (MKR). One Dai equals one US dollar (1:1 ratio) and will always remain so until the token is taken out of the circulation. DAI is backed by crypto collaterals that can be viewed publicly on the Ethereum blockchain.
DAI maintains stable value without centralized trust in a clever and exciting way. It shifts following market changes and thus keeps a steady price against other cryptocurrencies. The process is facilitated by the Maker platform along with the MKR token, CDP smart contracts, and several other stabilization mechanisms. There is no need for a centralized authority that oversees fiat-collateralized stablecoins like Tether (USDT), nor any traditional bank backs it. The project lives entirely on the Ethereum blockchain and its smart contracts, and that makes Dai a truly trustless and decentralized stablecoin which cannot be shut down nor censored.
In summary, the project brings the following benefits:
- One Dai will always be worth $1.
- No government or other centralized authority can shut it down.
- No individual can control it.
- Like other cryptocurrencies, it can be exchanged directly bypassing all middlemen.
- It can be traded freely as any other ERC-20 token.
- It brings trustless stability to the volatile crypto ecosystem.
- Anyone from any place in the globe can receive and send it just by having an Ethereum wallet.
USDT (Tether) – The Godfather of Stablecoins – is now tradeable via fox.exchange!
Highest by volume, launched in 2014, Tether is a blockchain-enabled platform designed to facilitate the use of fiat currencies in a digital manner. Tether works to disrupt the conventional financial system via a more modern approach to money. Tether has made headway by giving customers the ability to transact with traditional currencies across the blockchain, without the inherent volatility and complexity typically associated with a digital currency. As the first blockchain-enabled platform to facilitate the digital use of traditional currencies (a familiar, stable accounting unit), Tether has democratized cross-border transactions across the blockchain.
How does Tether work?
Tethers exist as digital tokens built on bitcoin (Omni and Liquid Protocol), Ethereum, EOS, and Tron blockchains. These transport protocols consist of open source software that interfaces with blockchains to allow for the issuance and redemption of cryptocurrency tokens, in our case, “tethers”. Tether Platform currencies are 100% backed by Tether’s reserves. Tethers are redeemable and exchangeable pursuant to Tether Limited’s terms of service. The conversion rate is 1 tether USD₮ equals 1 USD.
The Tether Platform is fully reserved when the sum of all tethers in circulation is less than or equal to the value of our reserves. Through our Transparency page, anyone can view both of these numbers on a daily basis.
Tether was originally created to use the Bitcoin network as its transport protocol – specifically, the Omni Layer – to allow transactions of tokenized traditional currency. Since this original version of Tether uses the Bitcoin blockchain, it inherits the inherent stability and security of the longest established blockchain network.
Tether on the Ethereum blockchain, as an ERC20 token, is a newer transport layer, which now makes tether available in Ethereum smart contracts or decentralized applications on Ethereum. As a standard ERC20 token it can also be sent to any Ethereum address.
Since Tether is currently available using different transport protocols, when users send tethers to other addresses, they need to carefully check the destination address to confirm they are selecting the correct transport protocol.
Tether’s platform is built to be transparent at all times. All tethers are backed 100% by Tether’s reserves.
View more transparency information.
Tether implementation has the following advantages over other fiatpegged cryptocurrencies:
- Tethers exists on the Bitcoin blockchain rather than a less developed/tested “altcoin” blockchain nor within closed-source software running on centralized, private databases.
- Tethers can be used just like bitcoins, i.e. in a p2p, pseudoanonymous, decentralized and cryptographically secure environment.
- Tethers can be integrated with merchants, exchanges, and wallets just as easily as Bitcoin or any other cryptocurrencies can be integrated.
- Tethers inherit the properties of the Omni Layer protocol which include: a decentralized exchange; browserbased, opensource, wallet encryption; Bitcoinbased transparency, accountability, multiparty security, and reporting functions.
- Tether Limited employs a simple but effective approach for conducting Proof of Reserves which significantly reduces our counterparty risk as to the custodian of the reserve assets.
- Tether issuance or redemption will not face any pricing or liquidity constraints. Users can buy or sell as many tethers as they want, quickly, and with very low fees.
- Tethers will not face any market risks such as Black Swan events, liquidity crunches, etc as reserves are maintained in a onetoone ratio rather than relying on market forces.
- Tether’s onetoone backing implementation is easier for nontechnical users to understand as opposed to collateralization techniques or derivative strategies.
How To Get Tether USDT
Buying and selling Tether coins is rather straightforward as the coin is supported by several international crypto exchanges. These exchanges support it as part of appropriate trading pairs, but now you can use fox.exchange to obtain USDT in a fast and secure way!
Tether’s website: https://tether.to/
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Our goal in fox.exchange is to make cryptocurrency exchanging as smooth as searching on Google or sending an email.
Main features of fox.exchange:
- Instant exchange – exchanging cryptocurrencies on other exchanges may take hours, while on fox.exchange it’s a matter of minutes: trades are done in 2 clicks and completed between 3 to 15 minutes.
- Best rates – we compare and combine offers from various centralized exchanges to get you the best offer: fox.exchange chooses the best market rates from the biggest and most diverse exchanges in real-time.
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- Extremely safe – unlike most of the other exchanges, we don’t hold customer deposits. Therefore, your funds don’t suffer custodial risk.
- Split Trade – the Whole is Greater than the Sum of its Parts: fox.exchange will split your order into fractions in order to get the best rate possible!
- Trade Routing – fox.exchange will choose the best trade route from coin A to coin Z, sometimes routing through G coin to maximize the rate.
- High Liquidity – by connecting to top exchanges in the market, fox.exchange has access to more than $1B daily.
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