What Are Stablecoins?
What is a stablecoin?
A stablecoin is a cryptocurrency designed to keep a stable value relative to a specific asset. In simple terms, it’s a digital version of a real-world currency like the U.S. dollar or euro.
What are examples of stablecoins?
The largest are USDC and USDT, both pegged to the U.S. dollar.
What makes them stable?
USDC and USDT hold reserves—U.S. dollars, Treasury bills, and similar assets—at regulated financial institutions.
Circle (USDC) and Tether (USDT) manage these reserves and publish regular third-party attestations to verify them.
Are they an asset or a payment rail?
They’re both. Stablecoins are digital assets that move over cryptocurrency networks, acting as programmable, global payment rails.
Who can issue stablecoins?
Anyone can issue one, but they must comply with local laws. To maintain their peg, issuers must inspire confidence—through transparent reserves, clear communication, and reliable redemption for fiat currency.
How are stablecoins used today?
- Remittance - moving money between countries
- Inflation protection for those in countries experiencing hyperinflation
- Earning yield on deposits - 4% returns are commonplace right now
Why are stablecoins better than traditional rails?
- Instant settlement
- Low fees when using L2 networks like Base
- Transparent, on-chain ledger
- Global and permissionless access
- Programmable money
- Simple to start using - you don't need to work with a banking provider