#Stablecoins

What are Stablecoins?

Stablecoins are cryptocurrencies designed to maintain a stable value, typically tied to an asset like the dollar, gold, or other fiat currencies. Unlike volatile cryptocurrencies like Bitcoin and Ethereum, they offer price predictability, making them useful for transactions, protection against fluctuations, and financial applications.

There are three main types of stablecoins:

- **Fiat-backed**: Maintain reserves equivalent to the asset they are pegged to, such as USDT (Tether) and USDC (Circle).

- **Crypto-backed**: Like DAI, which uses other cryptocurrencies as collateral.

- **Algorithmic**: Control the value through automatic rules for issuing and burning tokens, without the need for direct reserves.