What Are Stablecoins and How Do They Maintain Their Value?

Stablecoins are cryptocurrencies designed to minimize price volatility by being pegged to a stable asset, most commonly the US dollar. They maintain their value through various mechanisms: being backed by fiat currency reserves (fiat-collateralized), backed by other cryptocurrencies (crypto-collateralized), or through algorithmic methods that automatically adjust supply and demand.

They bridge the gap between fiat and crypto.