What are stablecoins and how do they maintain stability in DeFi?
Stablecoins are cryptocurrencies linked to real assets (for example, the US dollar).
How stablecoins work:
The goal is to keep their value as close as possible to a fiat currency (for example, 1 USDT = 1 USD).
Mechanisms: some stablecoins are backed by reserves in fiat currency, while others are regulated algorithmically (like Terra USD).
Uses in DeFi: stablecoins are used to provide liquidity, loans, and exchanges.
The most important thing to remember is that, despite their "stability", stablecoins are not free from risks of volatility and liquidation