Stablecoins are a class of cryptocurrencies designed to minimize price volatility, typically pegging their value to a stable asset like the U.S. dollar or other...
A stablecoin is a cryptocurrency designed to maintain a stable value, often pegged 1:1 to a fiat currency (like the USD) or other assets, to minimize price volatility inherent in most cryptocurrencies.
They typically maintain their peg through various mechanisms: collateralization (backed by fiat, crypto, or commodities) or algorithmic systems that adjust supply and demand to keep the price stable.
The main types include fiat-backed (e.g., USDT, USDC), crypto-backed (e.g., DAI), commodity-backed (e.g., PAX Gold), and algorithmic stablecoins, each with distinct collateralization or pegging strategies.
They provide a stable medium of exchange within the volatile crypto market, facilitate trading, enable fast and low-cost remittances, and are fundamental to the operations of decentralized finance (DeFi) applications.