Stablecoin

A stablecoin is a cryptoasset designed to maintain relatively stable value relative to a chosen reference. The reference is often a fiat currency such as the US dollar, although other models exist.

Stablecoins are used for payments, liquidity management, trading, and DeFi applications. They allow users to operate within blockchain infrastructure without continuously converting between volatile cryptoassets and traditional currencies.

Main stablecoin models

• fiat-backed — rely on reserves associated with traditional currencies;
• crypto-backed — use other cryptoassets as collateral;
• algorithmic — use programmed supply and incentive mechanisms.

Price stability does not mean that a stablecoin is risk-free or guaranteed to maintain an exact fixed price. Its value can depend on reserve quality, liquidity, redemption mechanisms, governance, market conditions, and protocol reliability.

Uses

Stablecoins are used as trading units on exchanges, for moving capital between networks, and as assets in financial protocols. In DeFi they commonly serve as base assets for lending, swaps, and liquidity provision.