Glossary · Stablecoins
Stablecoin
Also: stablecoins
A stablecoin is a token designed to hold a constant value against a reference asset, almost always the US dollar, using reserves, overcollateralization or a hedged trading position to defend the peg.
Related terms
- Peg
- A peg is the fixed exchange rate a stablecoin aims to hold against its reference asset, maintained in practice by arbitrageurs who mint or redeem whenever the market price drifts from it.
- Depeg
- A depeg is a sustained deviation of a stablecoin's market price from its target value, usually triggered by doubt about the reserves behind it or by redemption becoming slow, restricted or impossible.
- Fiat-backed stablecoin
- A fiat-backed stablecoin is a token whose issuer holds cash and short-dated government debt in reserve against every unit in circulation, redeeming units at par for qualified customers.
Guides that explain Stablecoin
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