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What is a stablecoin?

A stablecoin is a type of cryptoasset issued on the blockchain. It can be issued by:

  • A regulated entity,

  • An autonomous decentralized organization (DAO),

  • A decentralized finance protocol (DeFi).

Unlike other cryptoassets, stablecoins have a stable value, as their name suggests. In other words, they are not subject to price fluctuations.

Indeed, most are backed by fiat currencies such as the dollar (USDC, USDT, etc.) or the euro (EURS, EURT). Some are backed by tangible assets such as gold (PAXG, XAUT, etc.). Finally, there are stablecoins maintained by collateralization mechanisms, as well as algorithmic stablecoins.

Stablecoins are therefore designed to preserve part of a portfolio from price volatility.

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