Stablecoins are a type of cryptocurrency designed to maintain a stable value by being pegged to a reserve asset, such as the US dollar or gold. They offer a bridge between the volatile world of cryptocurrencies and the stability of fiat currencies.
Types of Stablecoins:
Fiat-Collateralized: Backed by a reserve of fiat currency, such as USD Coin (USDC) and Tether (USDT).
Crypto-Collateralized: Backed by a reserve of other cryptocurrencies, such as DAI.
Algorithmic: Use algorithms to control the supply and stabilize the value, such as TerraUSD (UST).
Benefits:
Stability: Provides a stable store of value, making them ideal for transactions and as a medium of exchange.
Accessibility: Enables easier entry into the crypto market for new users and businesses.
Innovation: Facilitates the development of decentralized finance (DeFi) applications and other blockchain-based services.
