In recent years, cryptocurrencies become very popular. The crypto is considered as the new type of currency. This is digital currency that can become the future of transaction means for various purposes. Its progress is considered quickly since there are now many cryptocurrencies that can be found. In trading, this type of instrument also becomes one of the stars that make many brokers and trading companies started to deliver necessary services and accesses for the crypto trading and exchanges. Crypto started with Bitcoin and now there many coins that can be accessed easily. In this case, cryptocurrency is quite interesting since its price and value depends on the market behavior. That is why it has high volatility. It is quite hard to maintain its stable price and the changes can be quite drastic. That is why then there are alternative called as stablecoins. As its name shows, it is more stable and it has low level of volatility. Even so, it still uses the main concept of cryptocurrency.
The stablecoin is designed to provide alternative of the current cryptocurrency such as Bitcoin and Etherium. These two are popular crypto with quite stable value although it still has quite high volatility compared to the real currency. Meanwhile, the stablecoin is created and designed so it will be able to maintain the fixed price. Fluctuations of demands and supplies that become the cores of market behaviors have no huge impacts on the stablecoin. Then, it provides fast access for trades and exchanges. Its stability can be obtained because of the source of its stablecoin. There are the centralized stablecoins and these are backed by the fiat currencies or real assets of companies that issue the coins. Then, there are also decentralized projects that still can maintain the fixed prices although it is not backed by the real assets or entities such as companies. As for the popular stablecoins, there are USDC and DAI. Information about the stablecoins and other cryptocurrencies can be learned deeper through all in one platform in Blockster website. .
USDC is product of joint project between Coinbase and Circle. It was launched in May 2018. The system of USDC was created based on the system of Etherium. However, it is not as exclusive as Etherium since it can be transferred and traded or exchanged to other blockchain, such as Solana, Stellar, and also Algorand. The value of USDC is based on the value of US dollar. It has ratio of 1:1 with the US dollars. However, in case the value is above $1, there will be mechanism to swap tokens with valued higher than $1. This will be able to boost the supply of USDC in circulation. In case the reverse situation occurs, there will be method to manage the value so it will stay close to ratio of 1:1.
Next, it is the DAI. When USDC is centralized stablecoin with Circle as the issuing company, DAI is different. It is a decentralized stablecoin so it is not issued or dependant to any companies or real assets. In some ways, it becomes the aspect that make DAI is more superior to the USDC. USDC itself was launched in December 2017 by MakerDAO. It is quite similar to the USDC since it is related to the Etherium Network. To mint the stablecoin, traders and investors can start depositing collateral. It is deposited to MakerDAO and there can be many kinds of collateral that can be accepted, such as Etherium, BAT, WBTC, and other cryptocurrency. After the deposit, trader can generate the amount of DAI based on the agreed value. Specifically related to the collateral by using Etherium, there is bigger benefit since its ratio of collateralization is up to 150%.
Based on these descriptions, similarities and differences between USDC and DAI can be seen. In term of similarities, both of them utilize the Etherium Project. Then, both of these stablecoins are available in various accesses in major crypto exchanges so it is not different from the normal cryptocurrency with the high volatility. As for the mechanism and system to get the stablecoins, both of them use the smart contract since they are open-source project. Of course, the main similarity will be about its stable values. As for the USDC, it has its own mechanism and approach to maintain its fixed value since there still can be fluctuation and it depends on the company or assets that issue the stablecoin.
As for the differences, basically both of them are very different since USDC is centralized stablecoin while the DAI are decentralized stablecoins. This makes the ownership of each of them becomes different. The USDC is owned by certain entity and it is the Circle while DAI is not controlled by any entity or anyone. It may have MakerDAO as the one that launched the stablecoin, but it is not the owner of DAI. Next, collateral becomes the interesting point. For the USDC, it is backed by the US dollar value or price with the ratio of 1:1. However, DAI is not backed by any real assets or currencies so it is backed or collateralized by crypto assets.
DAI can become good options of stablecoins for those who need multi-functionality but it may not be quite good in term of safety. When it talks about safety, USDC is better since it is issued by real entity and it has its own method to maintain the traditional stability. There can be still more things that can be learned regarding these two stablecoins and other options. The information can be obtained in Crypto Smarty where there are many kinds of news other kinds of information. It is very important to know more about the cryptocurrency and the stablecoins so these can be utilized well to gain higher profits in various trading and exchanges. In the end, trading will always require information to make decision and reliable and trusted sources of information will be very important to gain great success since the information will become the basis of various analyses and decision in trading. Moreover, the cryptocurrency is considered as new so there are things that should be learned about it.