What Is a Stablecoin and How Does It Stay at $1?
What is a stablecoin? Compare fiat-backed, crypto-backed and algorithmic designs, see why Terra UST failed and what the GENIUS Act requires of issuers.
What is a stablecoin? It is a crypto token designed to trade at a fixed price, almost always $1, so you can move dollars on a blockchain without the price swings of bitcoin. It stays near $1 only as long as the thing behind it holds up: cash reserves or locked crypto, and in the riskiest design an algorithm. In shortWhat it isA token built to trade at $1What holds the pegRedemption plus arbitrageThree designsFiat-backed, crypto-backed, algorithmicUS lawGENIUS Act, signed…
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