Volatilty can make everyday payments with cryptocurrencies challenging. Stablecoins bridge the gap between traditional currency and digital assets by pegging their value 1:1 to assets like the US Dollar.
Types of Stablecoins
- Fiat-backed: Fully backed by cash reserves and short-term Treasuries (e.g., USDC, USDT).
- Crypto-backed: Over-collateralized by other cryptocurrencies within smart contracts (e.g., DAI).