Definition
A cryptocurrency designed to maintain a stable value by being pegged to a reserve asset, typically a fiat currency like the US Dollar. Common stablecoins include USDC, USDT, and DAI.
Why It Matters
Stablecoins provide a way to hold value in the crypto ecosystem without exposure to the volatility of other cryptocurrencies, making them essential for trading and DeFi.
Example
A trader converts volatile crypto profits into USDC (a stablecoin pegged to $1 USD) to preserve value during market uncertainty.
Related Terms
Fiat Currency
DeFi
Token