#Learn&Earn

What is a stablecoin?

Stablecoins are a type of cryptocurrency that, unlike others like Bitcoin or Ethereum, maintains a more or less stable value. That is to say, they are assets with little volatility that can serve as a means of exchange.

➡️ To achieve this, they link their value to another asset such as the euro, the dollar, or even gold.

If a stablecoin is pegged to the dollar, its value will always be very close to $1, which offers stability against the fluctuations that are common in other cryptocurrencies.

How do stablecoins work?

These cryptos are designed to maintain their stable value, but how do they achieve this exactly? The key, as we have seen, lies in how they are backed and in the mechanisms they use to avoid sharp price movements.