Stablecoin

A stablecoin is a token designed to hold a steady value, almost always pegged one-to-one to a fiat currency like the US dollar. It gives a blockchain a stable unit of account, so people can price, pay, and save without exposure to the price swings of assets like ETH or bitcoin. One USDC or USDT is meant to always be worth one dollar.

The most trusted stablecoins are fully reserve-backed. For every token in circulation, the issuer holds roughly a dollar of safe assets - mostly cash and short-term US Treasuries - so holders can redeem tokens for dollars. USDC, issued by Circle, works this way, as does Tether's USDT. Reputable issuers publish regular attestations or a proof of reserves so the backing can be checked.

Most dollar stablecoins are ERC-20 tokens, so any self-custody wallet can hold them and they move with ordinary on-chain transfers.

For real-world assets, stablecoins are the settlement layer. You usually buy a tokenized share with a stablecoin, and distributions - rent, interest, repayments - are often paid back in one. They let the whole deal settle on-chain in dollars, instantly and around the clock, without waiting on bank wires.

Not all stablecoins are equal. Some are backed by riskier reserves or by other crypto; a few are "algorithmic," holding their peg through market incentives rather than reserves, and these have failed dramatically - TerraUSD collapsed in 2022, wiping out tens of billions. The relevant questions are always what backs the token, who holds the reserves, and whether you can actually redeem.

Source: Circle (circle.com), as of 2026.