Calm in the storm

The stablecoins guide.

Stablecoins bring steady value to a swinging market: digital dollars that move at internet speed. Here are the types, the uses, the lessons, and how to choose well.

Reviewed and current as of September 12, 2026

01What stablecoins are

A stablecoin is a cryptocurrency designed to hold a steady price, usually one dollar. While bitcoin and ether swing with the market, stablecoins aim to stay flat, giving traders a calm harbor and giving payments a reliable unit.

They live on blockchains like any other token, moving in minutes across borders at tiny cost. The combined market is worth well over one hundred billion dollars, an estimate from public market data, making stablecoins one of crypto's biggest success stories.

02The three types

Fiat backed stablecoins, like USDT and USDC, hold dollars or dollar assets in reserve for every token issued. Independent attestations check the books, and holders redeem tokens for dollars through the issuer.

Crypto backed stablecoins, like DAI, lock other crypto as collateral inside smart contracts. Extra collateral cushions price swings, and the system adjusts automatically to defend the peg.

Algorithmic stablecoins try to hold the peg with code alone, expanding and shrinking supply as demand shifts. The approach is elegant in theory and demanding in practice, as the next section shows.

03Why they matter

For traders, stablecoins are the parking spot: step out of a volatile position and wait in digital dollars, ready to move when opportunity calls. For payments, they carry dollar value across borders in minutes, reaching people whose local currency moves fast.

Builders use them as the quiet plumbing of DeFi: lending pools, payroll, remittances and savings products all run smoother on a stable unit. Calm money makes busy markets work better.

04TerraUSD: a lesson in respect for reserves

In May 2022, the algorithmic stablecoin TerraUSD, known as UST, lost its dollar peg. Selling overwhelmed the code meant to defend it, confidence evaporated, and tens of billions of dollars in value disappeared in a matter of days.

The lesson reshaped the industry: reserves you can verify beat promises you have to trust. Fiat backed issuers publish attestations, regulators stepped in with clearer rules, and the market now treats proof of backing as the price of admission. Painful chapters make for durable standards.

05How to evaluate a stablecoin

Start with the backing: who holds the reserves, what assets they are, and how often independent firms verify them. Published attestations from reputable auditors are the gold standard.

Then look at the track record: how the coin behaved during market stress, how deep its liquidity runs on major exchanges, and how transparent the issuer is about redemptions. A stablecoin that sailed through past storms with reserves in plain view earns its place in your toolkit.

06Keep learning on this site

The glossary defines pegs, collateral and redemptions in plain language. The DeFi guide shows where stablecoins do their daily work. And the Daily Brief tracks the issuers, the regulations and the new designs, every morning.