#StablecoinLaw $SUI

A stablecoin is a type of cryptocurrency created to maintain a stable value, minimizing the volatility common in other cryptocurrencies like Bitcoin and Ethereum. It achieves this stability by having its value backed by a more stable asset or a basket of assets.

How do Stablecoins work?

The functioning of stablecoins is based on different mechanisms to ensure parity with their reference asset:

* Backing with Assets: Most stablecoins maintain reserves of a "stable" asset (such as fiat currencies, commodities, or other cryptocurrencies) for each stablecoin issued. For example, a stablecoin backed by the US dollar would have $1 in reserve for each token issued.