Stablecoin
A cryptocurrency whose value is pegged to a stable asset, usually the dollar.
A stablecoin is a cryptocurrency designed to maintain a stable value relative to a reference asset — most commonly the US dollar (1 stablecoin = $1).
Main types of stablecoins:
•Fiat-collateralized (USDT, USDC) — each token backed by real dollars in a bank
•Crypto-collateralized (DAI) — backed by excess crypto collateral
•Algorithmic (FRAX, UST†) — stability through an algorithm, high risk
Stablecoins are useful for: storing value in the crypto ecosystem without volatility, trading, DeFi, and money transfers.
Note: USDT (Tether) is the most widely used, but there are debates about full reserve backing.