All terms
A token designed to hold a steady value, almost always one US dollar.
Stablecoins are the working currency of crypto. Fiat backed ones like USDC and USDT hold reserves off chain. Overcollateralized ones like DAI are backed by crypto locked in contracts.
They are not all equally safe. Ask what backs it, who holds the reserves, whether they are audited, and what happens in a redemption rush. Algorithmic stablecoins with no real backing have failed catastrophically before.
USDC briefly traded at 88 cents in March 2023 when part of its reserves sat in a failing bank. It recovered, but the lesson stands.
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More defi terms
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