💰 What is a Stablecoin?
A stablecoin is a cryptocurrency designed to maintain a stable value, usually pegged to the U.S. dollar (1 coin = $1).
Used for trading, transferring funds, and reducing volatility in crypto markets.
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🏆 Major ("Big") Stablecoins
1. USDT (Tether)
Largest stablecoin by market cap.
Widely used for trading and transfers.
Backed by fiat reserves (claims of audits vary).
2. USDC (USD Coin)
Second-largest, known for transparency and regular audits.
Backed by cash and U.S. Treasuries.
Issued by Circle, regulated in the U.S.
3. BUSD (Binance USD)
Issued by Binance (in partnership with Paxos).
Pegged 1:1 to USD, fully regulated (NYDFS-approved).
4. DAI
Decentralized stablecoin.
Backed by crypto (ETH, USDC) and over-collateralized.
Managed by MakerDAO protocol.
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🔍 Types of Stablecoins
Type Example Backed By
Fiat-Collateralized USDT, USDC USD in banks
Crypto-Collateralized DAI Crypto assets
Commodity-Backed PAXG Gold
Algorithmic UST (failed) No collateral, supply control
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✅ Why Big Stablecoins Matter
Stable Value: Holds steady at ~$1.00.
High Liquidity: Easy to trade or convert.
Low Volatility: Safer than BTC or ETH.
Essential for DeFi: Used in lending, staking, and swaps.
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⚠️ Risks to Watch
Reserve Transparency (especially for USDT).
Regulatory Crackdowns (esp. on BUSD).
Algorithmic Models (e.g., TerraUSD failure in 2022).
