Stablecoin
A crypto asset designed to hold a fixed value, usually one US dollar.
Also called: usdt · usdc · pegged
In plain language
Stablecoins are the settlement layer of crypto trading. Most pairs are quoted against them, and they function as the cash position between trades.
Backing models vary. Some hold cash and short-term treasuries; others rely on crypto collateral or algorithms. The backing determines how the peg behaves under stress.
Pegs are maintained, not guaranteed. A stablecoin trading at $0.97 during a panic is a real and recurring event.
Why it matters
If your account is denominated in a stablecoin, a depeg is a direct loss on your entire balance, including capital you thought was sitting safely in cash.
Common mistakes
- Treating all stablecoins as equally safe regardless of backing.
- Holding an entire account in one stablecoin without considering depeg risk.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
A market where assets are bought and sold for immediate delivery and full ownership.
How easily an asset can be bought or sold without moving its price.
How much and how quickly an asset’s price moves over a given period.
Any cryptocurrency other than bitcoin.
A leveraged derivative contract that tracks an asset’s price with no expiration date.