A stablecoin is a type of digital currency that is anchored to real assets, designed to maintain a relatively stable price. Its value is usually tied to a certain fiat currency, commodity, or other assets. In other words, their prices remain almost unchanged, like 'electronic cash' in the digital world.

Stablecoins can be divided into the following categories:

1. Fiat-backed

Fiat-backed is the most straightforward method. The issuer deposits a certain amount of fiat currency into a bank account as reserves, and every stablecoin issued corresponds to a certain amount of fiat currency. For example, Tether (USDT) is a typical fiat-backed stablecoin that claims each USDT is backed by one dollar. This method tightly links the value of the stablecoin to the fiat currency, thus maintaining relative stability.

2. Crypto asset-backed

Crypto asset-backed stablecoins are issued by collateralizing other crypto assets. The issuer requires users to deposit a certain value of crypto assets as collateral, and then issues a corresponding amount of stablecoins based on the value of the collateral. The advantage of this method is that it does not rely on the traditional banking system, but due to the significant price volatility of crypto assets, over-collateralization is needed to ensure the stable value of the stablecoin.

3. Algorithmic

Algorithmic stablecoins do not rely on any physical assets or crypto assets as collateral; instead, they use algorithms to adjust the supply of stablecoins to maintain their price stability. When the price of the stablecoin is higher than the pegged price, the algorithm increases the supply; when the price is lower than the pegged price, the algorithm decreases the supply. However, the stability of this method is relatively weak, as the effectiveness of the algorithm may be challenged in extreme market conditions.

The main application scenarios for stablecoins include:

1. Cross-border payments: Stablecoins can provide fast and low-cost cross-border payment services, reducing transaction speed from days to minutes or even seconds;

2. Asset allocation: In crypto asset trading, stablecoins serve as a medium of exchange, reducing transaction costs and risks;

3. Investment trading: Stablecoins cooperate with leading compliant exchanges to provide more efficient and economical payment infrastructure.


Issuers of stablecoins:

1. Companies developing stablecoins: Such as Circle and Tether, which invest the collateral funds received from issuing stablecoins into assets like U.S. Treasury bonds to earn interest.

2. Large e-commerce platforms: Some traditional retailers or e-commerce platforms, such as JD.com, have participated in testing stablecoins pegged to HKD/USD to reduce cross-border payment costs and accelerate fund settlement times, and it can also be used for investment profits.

3. Licensed financial institutions: For example, Standard Chartered Bank in Hong Kong, which earns payment settlement revenue by issuing stablecoins, expands its payment market share, and builds decentralized financial infrastructure.#币安Alpha上新 $BTC