Stablecoins are special types of digital money that aim to maintain a stable value and play a vital role in the cryptocurrency ecosystem.
Types of Stablecoins
There are various types of stablecoins, each maintaining its value in a unique way. The most common types include fiat-backed, crypto-backed, algorithmic, and commodity-backed stablecoins.
How Stablecoins Work
Stablecoins maintain their value by pegging to external assets. Fiat-backed stablecoins hold reserves in traditional currencies, while crypto-backed ones use more complex collateral schemes to remain resilient against market fluctuations.
Practical Applications of Stablecoins
Stablecoins are actively used in crypto exchanges, cross-border payments, and decentralized finance (DeFi) applications, enabling secure and efficient digital asset management.
Stablecoins address critical issues in the cryptocurrency world, providing price stability and facilitating broader real-world application.
