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Crypto Lesson with /sense
What is a stablecoin ?
A crypto stablecoin is a type of cryptocurrency designed to maintain a stable value, typically by being pegged to a reserve asset such as a fiat currency (like the US Dollar), a commodity (like gold), or an algorithmic mechanism.
Types of Stablecoins:
🚨 Fiat Collateralized Stablecoins
Backed 1:1 by a traditional currency (e.g., USD).
Reserves are held in a bank or custodian.
Examples: Tether (USDT), USD Coin (USDC), TrueUSD (TUSD).
🚨 Crypto Collateralized Stablecoins
Backed by other cryptocurrencies, often overcollateralized to absorb price volatility.
Smart contracts manage the backing and issuance.
Examples: DAI (backed by ETH and other crypto assets via MakerDAO).
🚨 Algorithmic Stablecoins
Use algorithms and smart contracts to control supply and demand, aiming to keep the price stable.
Not backed by any physical or digital asset.
Examples: TerraUSD (UST, which collapsed in 2022), though new models are still being tested.o 7 replies
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