Stablecoin
A cryptocurrency designed to maintain a stable value by pegging its price to an external asset like the US dollar, combining the stability of fiat currency with the utility of crypto.
A stablecoin is a type of cryptocurrency whose value is pegged to a reference asset — most commonly the US dollar — to minimize price volatility. Stablecoins serve as the backbone of the crypto economy, providing a stable medium of exchange and store of value that enables trading, lending, and payments without exposure to crypto's characteristic price swings. There are four main types: (1) Fiat-collateralized stablecoins (USDT, USDC) backed 1:1 by reserves of fiat currency or equivalent assets held by a centralized issuer, (2) Crypto-collateralized stablecoins (DAI) backed by overcollateralized crypto assets managed by smart contracts, (3) Algorithmic stablecoins that maintain their peg through algorithmic supply adjustments, and (4) Commodity-collateralized stablecoins backed by gold or other commodities. As of 2026, the total stablecoin market cap exceeds $250 billion, with USDT ($140B+) and USDC ($70B+) dominating. Stablecoins are the primary settlement layer for crypto trading, the preferred medium for cross-border payments, and increasingly used for real-world commerce. They are also the subject of intense regulatory focus globally, with the EU's MiCA framework and proposed US legislation establishing comprehensive stablecoin regulation.