What is Stablecoin?
A token designed to hold a constant price, usually one US dollar, by holding reserves or collateral.
Stablecoins are the cash layer of crypto: they let you hold dollar value without leaving the chain. They come in three broad kinds — fiat-backed, crypto-collateralised and algorithmic — with very different failure modes.
A stablecoin can break its peg. Treat the label as a promise to check, not a fact: whose reserves, audited by whom, and what happens if a bank or a curve fails.
Related terms
- PegBasics
The target price a stablecoin or wrapped asset is meant to hold, usually $1.
- CollateralDeFi
Assets locked to back a loan or a stablecoin, seized if the position falls below its ratio.