Stablecoin
A cryptocurrency designed to maintain a stable value relative to a reference asset, typically the US dollar.
In-Depth Explanation
Stablecoins achieve stability through different mechanisms: fiat-backed (USDC, USDT) hold reserves; crypto-backed (DAI) use overcollateralization; algorithmic stablecoins use supply adjustments. Stablecoins are crucial DeFi infrastructure, enabling trading pairs, lending, and value storage without fiat volatility.
Related Terms
Collateralized Debt Position
CDPA loan where users deposit collateral to mint or borrow assets, with liquidation risk if collateral value falls.
Peg
A target price that an asset aims to maintain, typically $1 for stablecoins or 1:1 for wrapped/synthetic assets.
Depegging
When a pegged asset loses its target price, trading significantly above or below its intended value.
More in DeFi Primitives
View all →Automated Market Maker
AMMA smart contract that provides liquidity and enables trading using a mathematical formula instead of an order book.
Liquidity Pool
LPA smart contract holding paired assets that enables trading, lending, or other DeFi activities.
Collateralized Debt Position
CDPA loan where users deposit collateral to mint or borrow assets, with liquidation risk if collateral value falls.
Lending Protocol
A DeFi application that matches lenders with borrowers through smart contracts, enabling permissionless borrowing and lending.