Stablecoin

A stablecoin is a cryptocurrency token designed to hold a steady value. Most are pegged one-to-one to a fiat currency, often the US dollar, so one token is meant to stay worth about one unit of that currency. Their prices stay level while other crypto assets can move sharply.

Most stablecoins hold their value through reserves. The issuer keeps assets such as cash, bank deposits, and short-term US Treasuries meant to match the tokens in circulation, and a holder can generally redeem a token for the underlying currency. Some stablecoins use other methods, such as algorithms or crypto collateral, to manage their peg.

People use stablecoins for payments, saving, trading, and moving value across blockchains without the price swings common to other tokens. They still carry risk. A peg can slip if reserves fall short or confidence drops, and its value depends on how the issuer backs and manages the token.