What is a Stablecoin?. A stablecoin is a token engineered to hold a steady price, commonly pegged to one US dollar. Designs include fiat‑backed reserves, crypto‑collateral, or algorithmic controls.
How it works
Issuers mint and redeem tokens against reserves or collateral rules. On‑chain transfers follow standard token logic; transparency tools let users audit movement and supply.
Why it matters
Stablecoins provide a low‑volatility unit for payments, remittances, and trading, bridging traditional money and blockchain rails.
Common pitfalls
- Confusing fully reserved coins with algorithmic designs
- Parking large balances in unverified contracts
- Ignoring issuer terms for redemption and blacklisting
Quick example
A merchant accepts a dollar‑pegged stablecoin to avoid volatility and receives settlement in seconds at low cost.
See also
- Custodial vs. Non‑Custodial Wallet
- TVL
- Tokenization
TL;DR: What is a Stablecoin? defined in plain English with practical next steps.
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