Stablecoins

Stablecoins are a type of cryptocurrency designed to maintain a stable value by pegging their worth to a reserve of assets, such as fiat currencies (like the US dollar or euro) or commodities (like gold). The primary purpose of stablecoins is to reduce the volatility that is commonly associated with traditional cryptocurrencies like Bitcoin and Ethereum, making them more suitable for everyday transactions and as a store of value.There are several types of stablecoins, including fiat-collateralized stablecoins, which are backed 1:1 by fiat reserves, crypto-collateralized stablecoins, which use other cryptocurrencies as collateral (often over-collateralized to account for price volatility), and algorithmic stablecoins, which use algorithms to control supply and demand in order to stabilize price.Stablecoins are commonly used for various purposes within the cryptocurrency ecosystem, such as facilitating trading on exchanges, providing liquidity in decentralized finance (DeFi) applications, and enabling users to transfer value without the price fluctuations typical of other cryptocurrencies.