Algorithmic Stablecoins: The 10 Best Stables to Keep Your Money Safe

Josh Miller
algorithmic stablecoins

Algorithmic stablecoins are aimed at solving the root problems of traditional stablecoins and all other coins: volatility.

While algorithmic stablecoins don’t solve short-term price fluctuations, they enable every cryptocurrency holder to receive a much safer long-term return on their assets, while not being exposed to extensive market risk.

Best Algorithm Stablecoins

Here’s a list of the best Algorithmic Stablecoins.

1. Frax

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$FRAX is the first fractional algorithmic stablecoin, with parts backed and parts algorithmic. It has the benefits of its predecessors but also has unique benefits—it can be minted in a way that avoids inflation, and it allows us to mint more coins only when it makes sense to do so.

The algorithm is easy to understand and transparent as well. There are also no transaction fees associated with using $FRAX.

2. JustStables

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There are plenty of solutions out there already for stablecoins, but they’re all centralized, meaning they can be censored, shut down and seized.

JustStable is a decentralized finance system of USDJ stablecoin for everyone, anywhere, anytime. It is based on the Ethereum blockchain and uses smart contracts to make it decentralized, trustless and transparent.

JustStable’s USDJ is built upon the JSE platform, which is an innovative algorithm-driven stablecoin solution that does not rely on stable assets or collateral.

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3. Neutrino

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The Neutrino protocol is an algorithmic price-stable assetization protocol that enables the creation of stablecoins tied to real-world assets or cryptocurrency.

It can be used as a platform by companies and token issuers to create their own proprietary stablecoin, or it can be used to audit the value of existing stablecoins on behalf of consumers.

4. Fei

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Many of us have experienced unstable prices in the cryptocurrency market. Fortunately, new technologies are being developed that can make the value of cryptocurrencies more stable.

5. Origin Dollar

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Origins Dollar is an algorithmic stablecoin that captures competitive yields while being passively held in wallets.

This allows it to be an active store of value, unlike competing coins that rely on interest rates that may fluctuate wildly when market conditions change.

As more users adopt Origin Dollar and settle payments with it, the value will increase through its inherent stability and utility as a medium of exchange.

6. Tomb Finance

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Tomb is an algorithmic stablecoin that was created to fix the major issues with existing projects.

It is pegged to the price of 1 FTM via seigniorage. This means that Tomb pays out 20% of fees in TOMB tokens to the holder of the coin contract, which allows TOMB holders to earn money just by holding it.

In order to make a profit, TOMB holders will have to trade TOMB for FTM on exchanges until the price ratio is 1:1.

7. Reflexer

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Reflexer is a decentralized, stable and non-pegged currency made for the digital economy. It has the benefits of a fast transaction speed (seconds), high security, low fees and fee-less transactions with no contract lock-in period.

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The use cases are endless with Reflexer as it can be used to create any financial products like stocks, futures and options. We want to make sure anyone can easily create their own cryptocurrency or financial contracts in minutes and with zero programming knowledge.

8. UXD

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UXD is a decentralized protocol that aims to provide an algorithmic stablecoin for the cryptocurrency market, and it is completely backed by a delta-neutral position using derivatives.

The algorithm used in UXD Protocol is an improvement on current stablecoin models, which are mostly backed by fiat or gold.

9. DefiDollar DAO

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DefiDollar is a multichain Defi protocol lab. It follows the same principles as Defix, with the goal of being able to create stablecoin assets on every chain imaginable.

It does this by using state channels and pegging tokens to external stablecoins like USD/EUR via oracles.

10. Sperax USD

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Sperax’s USDs are the most capital-efficient stablecoins in the world.

They’re backed by U.S. dollars at a 1:1 ratio and can be exchanged for dollars at any time, but they have an algorithmic system that reduces the collateralization requirement if the exchange rate between USDS and USD is high.

This means that as long as you don’t need to exchange your USDS back into dollars, you can run even riskier asset portfolios with less collateral, which makes stablecoin-backed assets cheaper to run than their traditional alternatives.

The cost savings that Sperax’s system produces means a lot in terms of blockchain-based financial products—a company can issue more shares or bonds for cheaper, for example, or a bank could hold its reserves in USDS instead of physical cash.

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The wide adoption of Sperax’s system will result in tremendous amounts of value creation for investors, savers, and borrowers alike.

FAQs

What is a stablecoin?

Stablecoins are cryptocurrencies that, as their name suggests, don’t experience large fluctuations in value.

Their appeal lies in the trust that they carry and can be used as a unit of account in transactions.

Can you mine stablecoins?

Unlike bitcoin where you can mine new coins to sell for cash, you can only get new stablecoins by buying them (or trading some other cryptocurrency for them).

What is an algorithm?

An algorithm is a precise set of instructions for completing a task. This can be a useful way to describe the computer programs we use every day, but algorithms are more than just computer programs.

Algorithms exist in nature too and can take the form of biological processes or simple decision trees.

What is an algorithmic stablecoin?

An algorithmic stablecoin is a cryptocurrency that is designed to resist fluctuations in value. It is an example of a centralized autonomous organization (DAO) that relies on the network effect to stabilize its currency.

An algorithmic stablecoin uses the power of smart contracts, which execute automatically and immutably, to achieve this goal.

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