What is a Stablecoin: USDT/USDC Explained
Stablecoins are cryptocurrencies pegged to a fiat currency (usually $1 USD). They're the "cash" of crypto — used to avoid volatility, transfer funds cross-chain, and participate in DeFi.
TL;DR
Stablecoins are cryptocurrencies pegged to a fiat currency (usually $1 USD). They're the "cash" of crypto — used to avoid volatility, transfer funds cross-chain, and participate in DeFi.
Three Types of Stablecoins
Fiat-backed (most common): USDT (Tether) and USDC (Circle). For every coin issued, $1 in reserves is held. USDT has the largest market cap (~$90B) but questionable transparency; USDC is more regulated and transparent. Algorithmic: UST (collapsed 2022). Maintains peg via algorithm — extremely high risk, historically many failures. Crypto-backed: DAI (MakerDAO). Over-collateralized with ETH and other crypto assets, decentralized but capital-inefficient.