Stablecoin
A cryptocurrency designed to maintain a stable value by pegging to a reserve asset like the US dollar.
Definition
A stablecoin is a type of cryptocurrency designed to maintain a stable value relative to a reference asset, typically the US dollar. There are three main types: fiat-collateralized (backed 1:1 by reserves, like USDT and USDC), crypto-collateralized (backed by other cryptocurrencies with over-collateralization, like DAI), and algorithmic (using supply/demand mechanisms to maintain the peg). Stablecoins serve as a bridge between traditional finance and crypto, enabling traders to park funds without converting to fiat. They are essential for DeFi protocols and cross-border payments. The total stablecoin market cap exceeds $150 billion, with USDT and USDC dominating.
Related Terms
Cryptocurrency
A digital or virtual currency secured by cryptography that operates on decentralized networks.
CryptoDecentralized Finance (DeFi)
Financial services built on blockchain technology that operate without traditional intermediaries.
CryptoBlockchain
A decentralized, distributed digital ledger that records transactions across many computers.