Learn about stablecoins: 4 types and market share analysis to 2025

Bitcoin's rollercoaster-like price fluctuations? If so, it's time to turn your attention to stablecoins. Today, we're going to take a look at the four main types of stablecoins, their characteristics, and even market share data for 2025. With a market worth over $206 trillion, it's pretty exciting, right? So, let's dive into the world of stablecoins!

What are stablecoins?

A stablecoin is a A special kind of cryptocurrency designed to keep its value stablefor example. They try to peg their value to a fiat currency, usually the U.S. dollar, so that 1 coin = 1 dollar. Because of this, stablecoins have the following advantages

1. A reliable store of value
2. Convenient use on cryptocurrency exchanges
3. Fast and affordable international money transfers
4. The foundation for decentralized finance (DeFi) services

Now let's take a closer look at the four main types of stablecoins.

Types of Stablecoins - 4 Types

1. fiat-backed stablecoins

This type of stablecoin is the most widely used. It's issued against real fiat currency (usually US dollars) as collateral.

Features:

• High stability (holds fiat at a 1:1 ratio)
• Centralized structure (issuer manages the fiat currency)
• Better for compliance

Representative stablecoin types:

• Tether (USDT): Synonymous with stablecoins! No. 1 in market share
• USD Coin (USDC): A safe choice that complies with U.S. regulations
• Binance USD (BUSD): Binance exchange's own stablecoin

2. crypto-backed stablecoins

This type uses other cryptocurrencies, such as Bitcoin or Ethereum, as collateral and is overcollateralized to account for the volatility of cryptocurrencies.

Features:

• Decentralized structure (operated by smart contracts)
• Overcollateralization (typically a collateralization rate of 150% or higher)
• High transparency

Representative stablecoin types:

• DAI: The Most Popular Cryptocurrency-Backed Stablecoin
• sUSD: Stablecoin on the Synthetix platform

3. commodity-backed stablecoins

It uses physical assets like gold, silver, and oil as collateral, with the advantage that you can digitally own the value of the physical asset.

Features:

• Leverage the stability of physical assets
• Tendency to centralize (requires physical asset management)
• Strong ties to the real economy

Representative stablecoin types:

• Pax Gold (PAXG): 1 coin = 1 ounce of gold
• Tiberius Coin (TCX): Issued based on multiple metals

4. algorithm-based stablecoins

This type of security is the most innovative, but also the most risky, as it does not collateralize specific assets, but instead uses algorithms to regulate supply to maintain price stability.

Features:

• Fully decentralizable
• Algorithmic supply throttling
• High risk (unstable when market confidence drops)

Representative stablecoin types:

• Ampleforth (AMPL): Automatically adjusting supply based on demand
• Fei Protocol (FEI): Combining algorithms and liquidity-based mechanisms

Comparison table by stablecoin type

Stablecoin Market Share Analysis for 2025

Now, let's take a look at each stablecoin's share of the actual market. Below is the latest data as of January 18, 2025. Surprisingly, the entire stablecoin market is worth about $206.2 billion!

How about a visual representation of this data? Check out the donut chart Python visualization code below.

Create charts directly in Python

For those of you who are interested in data visualization, here's a tutorial on how to create the doughnut chart we saw at the beginning of the post Python I'll share the code with you so you can try it out!

import matplotlib.pyplot as plt
import numpy as np

Set up the # data
labels = ['Tether\n(USDT)', 'USD Coin\n(USDC)', 'Dai\n(DAI)',
          'Binance USD\n(BUSD)', 'Pax Dollar\n(USDP)', 'Others']
sizes = [66.5, 22.2, 2.6, 1.2, 0.6, 6.9]
colors = ['#4E79A7', '#F28E2B', '#E15759', '#76B7B2', '#59A14F', '#EDC949']

# Set the degree of separation of small fractions to be inversely proportional to market share
explode = [0, 0] + [0.1 * (1/size) for size in sizes[2:]]

Set the # plot size and style
plt.style.use('seaborn')
fig, ax = plt.subplots(figsize=(12, 8), facecolor='white')

Create a # donut chart
wedges, texts, autotexts = ax.pie(sizes,
                                 explode=explode,
                                 labels=labels,
                                 autopct='%1.1f%%',
                                 startangle=90,
                                 pctdistance=0.85,
                                 colors=colors,
                                 wedgeprops=dict(width=0.5, edgecolor='white', linewidth=2),
                                 textprops={'fontsize': 12},
                                 labeldistance=1.05)

Set a # ratio text style
for autotext in autotexts:
    autotext.set_color('black')
    autotext.set_fontsize(10)
    autotext.set_fontweight('bold')

Set the # label text style
for text in texts:
    text.set_fontsize(11)
    text.set_fontweight('bold')

Set the # title
plt.title('Stablecoin Market Share (2025)',
         pad=20,
         fontsize=16,
         fontweight='bold')

# Show total market capitalization in the center of the chart
center_text = "Total Market\nShare"
plt.text(0, 0, center_text,
         ha='center',
         va='center',
         fontsize=12,
         fontweight='bold')

Adjusting the # layout
plt.tight_layout()

Remove the # grid
plt.grid(False)

plt.show()
Show visualization results

When you run this code, you'll get a nice donut chart like the one above!

Analyzing Stablecoin Market Trends to 2025

There are a few trends to watch for in the stablecoin market in 2025.

1. Tether (USDT) Continues to DominateUSDT maintains a dominant share of 66.51 TP3T, but its share is down slightly from 2023.
2. Growth of USDCUSD Coin is firmly in second place with 22.21 TP3T, and it looks like the strategy of emphasizing compliance and transparency is paying off.
3. The decline of BUSD: Binance USD's share of the market, which was once third, has dropped significantly to 1.21 TP3T, likely due to regulatory issues.
4. New players emergeThe 'Other' category accounts for 6.91 TP3T, which is a sign of the variety of new stablecoins entering the market.
5. Huge market size: A staggering $206.2 billion shows that stablecoins are now part of mainstream finance, not just a niche market.

Recap: The future of stablecoins

By 2025, stablecoins are fully established as a core part of the cryptocurrency ecosystem, with a market size of over $206 trillion showing that they are no longer just a speculative vehicle, but an important part of the real financial system.

Each type of stablecoin has its own set of advantages and disadvantages, as shown below.

• Fiat-collateralized fiat dominated the mainstream market with its stability and compliance.
• Cryptocurrency collateral is popular among those seeking decentralization.
• Commodity collateralization fills a unique need with its tie to physical assets.
• Algorithmic-based is still a small market share, but it's gaining traction as an innovative approach.

What type of stablecoin do you like best?

The stablecoin market is only going to diversify and grow in the coming years, and we're excited to see how the regulatory landscape changes, new technologies emerge, and user needs evolve.

Now you're a stablecoin expert, and we hope you'll use this knowledge to make smarter investment decisions.