What Is a Stablecoin?

A stablecoin is a cryptocurrency designed to maintain a stable value, usually pegged to a real-world asset like the US dollar or gold.

Examples include USDT, USDC and BUSD, all pegged 1:1 to USD.

The goal of stablecoins is to combine the stability of fiat currency with the transparency and efficiency of blockchain technology.

How Do Stablecoins Maintain Their Value?

There are three main models:

These mechanisms help stablecoins stay near $1, even in volatile markets.

Stablecoins are the backbone of the crypto ecosystem because they:

In short, they bring stability and usability to a highly volatile market.

Despite the name, stablecoins aren’t risk-free:

Stablecoins are more than just a tool for traders - they are the foundation that keeps the crypto economy running.

Understanding how they work helps users stay safe and navigate the market confidently.