What is meant by a stablecoin? A stablecoin is a cryptocurrency whose exchange rate is pegged to another asset — fiat currency or commodity. For example, 1 USD Coin (USDC) equals $1, and 1 Tether Gold (XAUt) corresponds to 1 ounce of gold. However, on exchanges, the exchange rate of stablecoins can fluctuate due to changes in demand for the coins. Generally, the price fluctuations do not exceed 1%. For instance, 1 USDC can sometimes be bought for $0.99, and 1 XAUt was offered for $3,400, while an ounce of gold costs $3,395.
Leading stablecoins by market capitalization
What types of stablecoins are represented in the market? Stablecoins are divided based on the method of maintaining exchange rate stability:
fiat;
commodity;
cryptocurrency;
algorithmic.
Issuers of fiat stablecoins hold fiat currency or bonds issued by various governments on their balance sheets. In particular, the company Techteryx, which manages the circulation of TrueUSD (TUSD), guarantees the stability of the exchange rate of its coins by holding dollars on its balance.
Commodity stablecoins are backed by reserves of precious metals and oil. The most well-known cryptocurrency based on oil was Petro (PTR), which ceased to exist in 2024, issued by the government of Venezuela. Among 'gold' stablecoins, Pax Gold (PAXG) can be noted, created by the company Paxos, which purchases the precious metal in exchange for issued coins.
The exchange rate stability of cryptocurrency stablecoins is supported by reserves of digital assets. For example, the issuer of dollar-pegged tokens Dai (DAI), MakerDAO, holds Ether, USDC, and other digital assets.
The price of algorithmic stablecoins remains stable due to an algorithm, smart contract, or specific action mechanism. In particular, the value of the coins is adjusted by regulating the circulating supply of assets. If the exchange rate of the algorithmic stablecoin Ampleforth (AMPL) increases, the number of coins in crypto wallets increases. Conversely, when the exchange rate falls, the number of issued assets decreases.