What is a stablecoin?
Stablecoins are cryptocurrencies pegged to stable assets like the US Dollar. They combine the benefits of crypto (speed, transparency) with price stability.
What is a stablecoin?
A stablecoin is a type of cryptocurrency that is designed to maintain a stable value by being pegged to a traditional asset, such as:
-
Fiat-backed: Pegged 1:1 to currencies like the US Dollar (e.g., USDT, USDC, BUSD)
-
Crypto-backed: Collateralized by other crypto assets (e.g., DAI)
-
Algorithmic: Uses smart contracts and supply mechanisms to maintain value
Stablecoins are commonly used for:
-
Fast and low-cost cross-border transfers
-
Hedging against market volatility
-
Earning yield in DeFi protocols
-
Pricing crypto assets in a familiar unit of value (USD equivalent)
They play a critical role in trading, payments, and decentralized finance.