Stablecoins generally come from three main sources:
1. Fiat-backed Stablecoins – These are backed by reserves of government-issued currency (like USD, EUR). Examples:
USDT (Tether) – Backed by US Dollars
USDC (USD Coin) – Managed by Coinbase & Circle
BUSD (Binance USD) – Binance’s approved stablecoin
2. Crypto-backed Stablecoins – These are backed by reserves of other cryptocurrencies. Examples:
DAI (MakerDAO) – Ethereum-based collateral-backed stablecoin
3. Algorithmic Stablecoins – These maintain price stability using smart contracts and supply adjustments. Examples:
FRAX – A hybrid algorithmic stablecoin
UST (Terra USD) – An algorithmic stablecoin (collapsed in 2022)