Digital currencies are known for their high volatility, where their prices can rise significantly or fall sharply within a few hours, let alone a few days and weeks. In such circumstances, a solution is needed to maintain the stability of the currency's price, while providing all the other advantages of decentralized options for users.

In this guide, we will analyze these solutions with a particular focus on the US Dollar Coin (USDC), a stablecoin issued by Centre, LLC, which is composed of Circle and Coinbase.

What is a stablecoin?

First, a brief overview of stablecoins and how they work. The European Central Bank defines stablecoins as "digital units of value that differ from existing forms of currency, and are based on a set of stabilization tools to reduce their price volatility against a currency or a basket of them".

Stablecoins are digital representations of fiat currencies on blockchain networks, developed to mimic the prices of fiat currencies using a stabilization mechanism.📳If you found the analysis useful, please like it, share it, and comment on the next pair you would like to analyze📩