Business & Finance

Using Stable Coins to Hedge Your Risk

Using Stable Coins to Hedge Your Risk

Cryptocurrencies such as Bitcoin and Ethereum might be too much risk for some people as it’s volatility might not produce the level of security they desire. If you’re one of those who is skeptical about Cryptocurrency then you can consider Stablecoins.

Stablecoin: What is it all about?

Stablecoin is a form of Cryptocurrency that has its value fixed to another asset such as the U.S. dollar or the euro, or other kinds of assets.

Stablecoins are pegged to a particular asset or currency ensuring that it’s value remains stable and fixed to its underlying asset. The body issuing a Stablecoin often fixes it with an underlying asset that is held in reserve.

Cryptocurrencies such as Bitcoin and Ethereum aren’t backed  by reserves hence value fluctuations will affect its worth. Hence Stablecoins were introduced to control the constant and unpredictable price swings in the cryptocurrency.

Types of Stablecoins

There are a number of Stablecoins in the market with the most rated being:


This Stablecoin is issued by finance tech company Bitfinex. Tether is pegged against the US dollars which means a specific amount in the form of liquid cash is held in reserve as a form of insurance for its value.

1 Tether is valued 1 US dollar 1 USD dollar. The amount of Tether in circulation stands at 73.81 billion USD. At the moment Tether is ranked fifth in the list of most popular cryptocurrency.

Digix Gold

Digix Gold is issued by a Singapore based company and its value is backed by gold reserves.

There’s currently 74,634 DGX coins in market supply with a market capitalization that coinmarketcap placed at $3,905,265 USD.


This is fast-growing Stablecoin that’s attracting investors. True USD is pegged at 1 dollar to 1 TUSD.

The coinmarketcap of True USD is $1,248,612,131 USD and the amount of TUSD in circulation is 1,247,675,427 TUSD.

Other popular Stablecoin in the market are USD Coin (USDC) which has a marketcap  of $33 billion. There’s also TerraUSD (UST) with a market capitalization of $3 billion.

Furthermore, being able to speculate the price of crypto is valuable. Quantum AI trading app can help users identify the best crypto pairs to trade.

Why You Should Use Stablecoin to Hedge Your Risk.

If you desire a stable asset that is not affected by changes in market prices and demand then you should consider Stablecoins. Stablecoins are less volatile compared to other cryptocurrencies.

The fact that they are backed by fixed assets makes them safe. In Cryptocurrency for example a slump in price means that you would have lost a part of your investment. However with Stablecoins your investment is backed at a fixed value.

Stablecoin is decentralized which means you don’t need third parties such as banks to conduct your crossborder payment and investments.

Essentially, if you’re looking for a stable asset that will guarantee the value of your investment over time you can choose a well performing Stablecoin to put your money in.

Lending and Staking offers you a chance to make a profit from your stablecoin. Through lending you will be loaning your Stablecoin in return for an interest. You can also win rewards by staking your Stablecoins in what is referred to as “A Proof of Stake Procedure”.

Bottom Line

If you’re looking for a long term investment with big returns, Stablecoins might not be the best choice. For long term investment, you can go for high risk Cryptocurrencies like Bitcoin or Ethereum.

Ultimately, if you aren’t ready for the high risk world of Cryptocurrency, or you need a safe and secure asset for the rainy days then you should opt for Stablecoins coins.

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