Stablecoins provide a stable, digital alternative to fiat currencies—typically pegged to assets like the U.S. dollar or gold. Here are the current top 10 stablecoins, ranked by market cap, with a snapshot of how each maintains its peg.

1. Tether (USDT)

• Peg Mechanism: 1:1 backed by a mix of USD cash, commercial paper, reinvestments.
  

• Notable: The largest stablecoin by far, with a market cap exceeding $155 billion (Shamlatech,Forbes).

2. USD Coin (USDC)

• Peg Mechanism: Fully reserve-backed (cash and short-term U.S. Treasuries), monthly attestations.
  

• Notable: Issued by Circle; market cap ~ $60–66 billion (Axios).

3. Ethena USDe (USDe)

• Peg Mechanism: Fiat-backed; used in DeFi strategies.
  

• Notable: Around $10 billion market cap; emerging as a top contender (The Motley Fool).

4. DAI (MakerDAO)

• Peg Mechanism: Crypto-collateralized via smart contracts.
  

• Notable: Decentralized stablecoin with ~$5–6 billion cap (The Motley Fool,Wikipedia).

5. First Digital USD (FDUSD)

• Peg Mechanism: Dollar-backed; issued by First Digital.
  

• Notable: Market cap in the low billions; trusted by institutions (Shamlatech,Forbes).

6. PayPal USD (PYUSD)

• Peg Mechanism: Fiat-backed; integrated into PayPal’s ecosystem.
  

• Notable: Launched by PayPal and Paxos; ~$1 billion cap (CoinGecko,Wikipedia).

7. World Liberty Financial USD (USD1)

• Peg Mechanism: Dollar-backed; issued by a private financial group.
  

• Notable: Market cap around $2.2 billion; high-profile note due to its association (The Motley Fool,Wikipedia,Reuters).
  

8. USDS / Sky Dollar (USDS)

• Peg Mechanism: Fiat-backed.
  

• Notable: ~$7–8 billion market presence; stable in DeFi usage (Kraken,DefiLlama,CoinGecko).
  

9. Pax Dollar (USDP)

• Peg Mechanism: Regulated fiat-backed stablecoin.
  

• Notable: Issued by Paxos; known for strong regulatory compliance (Wikipedia,Forbes).

10. PAX Gold (PAXG)

• Peg Mechanism: Backed by physical gold at a 1:1 ratio.
  

• Notable: Unique in this list for commodity-backed value (~$960 million cap) (Wikipedia).

How These Stablecoins Differ by Peg

• Fiat-backed stablecoins (e.g., USDT, USDC, FDUSD, PYUSD, USDS, USDP) hold reserves in cash or equivalents.
  

• Collateralized stablecoins (e.g., DAI) use crypto assets locked in smart contracts to maintain their peg.
  

• Commodity-backed stablecoins (e.g., PAXG) derive value from physical assets like gold.

The thing to remember about stablecoins:
While they all maintain a $1 peg, their stability relies on different reserve models—from fiat to crypto collateral to real-world assets—so understanding the backing is essential.