Stablecoin
A cryptocurrency designed to maintain a stable value, typically pegged to a fiat currency like USD.
Stablecoins aim to keep their price stable via fiat reserves, on-chain collateral, algorithms, or a mix. Types include fiat-backed (USDC), crypto-collateralized (DAI), and algorithmic (historically fragile) designs.
"A fiat-backed stablecoin holds dollars in reserve for each token issued; users redeem tokens 1:1 for USD through approved channels."
Risks vary: reserve transparency, depegs, smart contract bugs, and regulatory actions. Algorithmic models can fail under stress, causing spirals.
"During market stress, a stablecoin slipped to $0.92 before recovering as market makers arbitraged the peg."
Related Terms
Collateral
→Assets pledged to secure a loan or position.
Oracle
→A system that supplies on-chain smart contracts with trustworthy off-chain data.
Over-the-counter (OTC)
→Trades conducted directly between parties rather than through a public order-book exchange.
Liquidity
→The ease with which a crypto asset can be bought or sold without affecting the market price.
All terms and definitions may update as the Cryptionary improves.
