TOKENS & ASSETS
Stablecoin
Definition
A stablecoin is a cryptocurrency designed to maintain a stable value relative to a reference asset, usually the US Dollar. Stablecoins provide the benefits of crypto (fast, borderless transfers) while minimizing price volatility.
Example
Example
USDC maintains a $1 value backed by dollar reserves, while DAI is decentralized and backed by crypto collateral.
Risks to Consider
Risks
- Depeg risk
- Centralization
- Collateral liquidation
Common Questions
What's the difference between centralized and decentralized stablecoins?
Centralized stablecoins like USDC are backed by fiat reserves, while decentralized ones like DAI use crypto collateral and algorithms.
