Stablecoins are a type of cryptocurrency designed to minimize price volatility by pegging their value to stable assets like fiat currencies or commodities.
1. Types of Stablecoins
• Fiat-Backed: Pegged to fiat currencies (e.g., USD). Examples include Tether (USDT) and USDC.
• Commodity-Backed: Pegged to assets like gold.
• Algorithmic: Maintain stability through supply-demand mechanisms.
2. Why Stablecoins Are Popular
• Price Stability: Suitable for everyday transactions and remittances.
• Crypto Gateway: Acts as an entry point for new users.
• Liquidity: Widely used in decentralized finance (DeFi) and exchanges.
3. Risks of Stablecoins
• Regulation: Increased scrutiny from governments.
• Collateral Risk: Reserves may not fully back the tokens.
• Algorithmic Failures: Potential instability for algorithmic stablecoins.
4. How to Use Stablecoins
• Trading Tool: Hedge against market volatility.
• DeFi Integration: Use for lending, borrowing, or earning interest.
• Cross-Border Payments: Low fees for international transfers.

Stablecoins bridge the gap between volatile cryptocurrencies and traditional financial systems.