#AirdropSafetyGuide

A stablecoin is a type of cryptocurrency designed to maintain a stable value by pegging it to a reserve asset, such as fiat currency (e.g., USD, EUR), commodities (e.g., gold), or other cryptocurrencies. Unlike volatile cryptocurrencies like Bitcoin, stablecoins aim to provide price stability, making them ideal for payments, remittances, and decentralized finance (DeFi) applications.

There are three main types:

1. **Fiat-collateralized** (e.g., USDT, USDC) – backed by fiat reserves.

2. **Crypto-collateralized** (e.g., DAI) – backed by other cryptocurrencies with over-collateralization.

3. **Algorithmic** – uses smart contracts to control supply dynamically.

Stablecoins combine crypto benefits with reduced volatility.