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What is a Stablecoin?
What is a Stablecoin?

Minimizing price volatility in DeFi

Abishek Dharshan avatar
Written by Abishek Dharshan
Updated over a week ago

πŸ’Έ Stablecoin

Stablecoins are designed to minimize price volatility by holding on to a specific value. There are generally three types:

  • Fiat-collateralized stablecoins e.g. Tether (USDT) and TrueUSD are pegged 1:1 to the US dollar and are backed by dollar deposits.

  • Crypto-collateralized stablecoins e.g DAI β€” although this stablecoin is also pegged to the US dollar, its reserves are held in ETH

  • Commodity-collateralized stablecoins e.g. Digix is a stablecoin backed by gold.

  • Non-collateralized (algorithmic) stablecoins


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