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Web3 Popular Science | What is a Stablecoin

Most cryptocurrencies have high volatility, and their value may change rapidly, this high volatility may bring high profits to traders and holders, but it can also lead to losses. Stablecoins, on the other hand, are fundamentally different in this aspect, as they are non-volatile crypto assets.

Unlike traditional crypto assets, the value of stablecoins is pegged to a certain currency or commodity. So far, most stablecoins are pegged to the US dollar. For example, Tether (USDT) is a type of stablecoin, where 1 USDT is equal to 1 US dollar. Because stablecoins are tied to real-world assets, they are not significantly affected by the general volatility of the crypto market.

Most stablecoins actually operate in token form on different networks - many of them operate in ERC20 token form on the Ethereum blockchain.

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