Stablecoin

A stablecoin is a cryptocurrency designed to hold a steady value, most commonly by pegging 1:1 to a fiat currency like the US dollar. Fiat-backed stablecoins (e.g. USDT, USDC) aim to hold reserves of cash and cash-equivalents matching every coin in circulation, while other designs use crypto collateral or algorithms to maintain the peg, with varying track records of success. Traders use stablecoins to move value between exchanges, sit out of volatile markets, and settle trades without converting back to traditional currency. A stablecoin is only as reliable as the reserves and transparency backing it — pegs have broken before when backing was inadequate or mismanaged.