# What Are Stablecoins and How Do They Relate to Fungibility? ▴ Learn

**Published:** 2025-11-16
**Categories:** Learn

---

## What Are Stablecoins and How Do They Relate to Fungibility?

Stablecoins are a class of cryptocurrencies designed to minimize price volatility, typically by being pegged to a "stable" asset like the US dollar. Since one unit of a specific stablecoin (e.g.

USDC or DAI) is intended to be exactly equal to any other unit, they are highly fungible. This fungibility is essential for their role as a medium of exchange and a stable store of value in the volatile crypto market.

What Role Do Stablecoins (Fungible Tokens) Play in Providing Base Liquidity for Options Trading On-Chain?

How Does the Token’s Fungibility or Non-Fungibility Affect Its Integration into the Business?

How Are Stablecoins Different from Other Cryptocurrencies?

In Options Trading, How Would a Fungible Token Option Be Settled versus a Non-Fungible Token Option?

## Discover More

- 
### [How Does the Rise of Stablecoins Affect Bitcoin Dominance, Especially during Market Volatility?](https://crypto.greeks.live/learn/how-does-the-rise-of-stablecoins-affect-bitcoin-dominance-especially-during-market-volatility/)
![Two sharp, angular crystalline structures, separated by a narrow aperture revealing a metallic securing element, dominate the dark frame. These geometric forms, refracting internal teal and pale gold light against a stark black background, conceptually model the discrete outcomes of high-frequency trading strategies. The separation signifies divergence in derivative pricing models like implied volatility surfaces applied to perpetual swaps or futures contracts. This visual partition embodies market fragmentation and the inherent risk asymmetry within decentralized exchange limit order books, illustrating the separation between bid ask spreads and the instantaneous settlement of on-chain leverage protocols. The polished surfaces reflect systemic risk propagation across different asset tranches, key to understanding complex DeFi collateral management and margin calls in volatile digital asset environments.](https://crypto.greeks.live/wp-content/uploads/2025/10/Bifurcated-Glass-Prisms-Reflecting-Volatility-Skew-in-Decentralized-Finance-Mechanisms.jpg)

Stablecoins compete with Bitcoin as a safe haven, reducing Bitcoin's dominance as investors use them to avoid market volatility.

- 
### [What Are Synthetic Assets and How Are They Created Using Smart Contracts?](https://crypto.greeks.live/learn/what-are-synthetic-assets-and-how-are-they-created-using-smart-contracts/)
![The visualization presents three interconnected circular apertures set against deep contrast, suggestive of a complex mechanical exchange or data nexus within decentralized finance protocols. The central element resembles a precise calibration target, perhaps representing oracle inputs or a reference price feed for options valuation. The flanking components display segmented metallic surfaces, one side exhibiting signs of digital degradation or temporal stress manifested as orange particulate matter on a cyanic substrate, analogous to managing counterparty risk or slippage in high-frequency crypto arbitrage. This configuration speaks to the underlying engineering of automated market maker bonding curves and the structured settlement layers required for robust decentralized exchange platform functionality and layered derivative instruments like perpetual futures contracts or synthetic asset issuance.](https://crypto.greeks.live/wp-content/uploads/2025/10/Symmetric-Aperture-Assembly-Modeling-Digital-Asset-Mechanism-Convergence-Parameters-Quantifying-Blockchain-Liquidity-Swaps.jpg)

Synthetic assets are blockchain-based tokens that replicate the value of real-world assets, created and managed by smart contracts.

- 
### [What Are the Three Main Types of Stablecoins (Fiat-Backed, Crypto-Backed, Algorithmic)?](https://crypto.greeks.live/learn/what-are-the-three-main-types-of-stablecoins-fiat-backed-crypto-backed-algorithmic/)
![This sleek ovoid device, featuring a high contrast dark display surface framed by ivory composite and speckled cyan housing, visually models a dedicated hardware wallet or cold storage solution for managing digital asset risk exposure. The integrated retractable stylus, rendered in muted teal with metallic spring accents, suggests tactile interaction crucial for authorizing complex blockchain transactions or setting intricate limit orders for perpetual swaps or asset backed security tokens. The circular metallic interface element implies secure key generation or multi factor authentication for DeFi collateral management or accessing options Greeks visualizations on a permissioned ledger system, embodying cryptographic security protocols essential for minimizing counterparty risk in decentralized finance.](https://crypto.greeks.live/wp-content/uploads/2025/10/Ergonomic-Cryptocurrency-Wallet-Interface-and-On-Chain-Derivative-Execution-Stylus-Mechanism.jpg)

Fiat-backed (centralized reserves), Crypto-backed (over-collateralized crypto), and Algorithmic (smart contract-based peg mechanism).

- 
### [Why Are Stablecoins Inherently Fungible Assets?](https://crypto.greeks.live/learn/why-are-stablecoins-inherently-fungible-assets/)
![This abstract visualization depicts metallic gray and translucent cyan geometric planes radiating from a central nodal structure suggesting a dynamic market mechanism or smart contract core. The sharp angular protrusions mimic leveraged option spread geometries crossing a decentralized finance protocol locus. Specifically, the structure suggests an instantaneous snapshot of option decay or time premium erosion on an exotic instrument structure. We observe simulated orthogonal axes representing perpetual swap liquidity pools and instantaneous futures price discovery across a regulated derivatives exchange framework. The composition embodies the inherent bifurcation risk management inherent in high-frequency arbitrage strategies concerning tokenized real-world assets and synthetic asset issuance protocols. This complex interplay defines the theta decay dynamic for sophisticated structured products.](https://crypto.greeks.live/wp-content/uploads/2025/10/Asymmetric-Volatility-Surface-Projections-Centered-on-a-DeFi-Exchange-Mechanism-Visualized.jpg)

Designed as a stable medium of exchange (1:1 peg), every unit must be identical and interchangeable, making them ERC-20 compliant.

- 
### [What Is a UTXO and How Does It Relate to Signing a Transaction?](https://crypto.greeks.live/learn/what-is-a-utxo-and-how-does-it-relate-to-signing-a-transaction/)
![A macro close-up reveals a polished, cyan-hued spherical component recessed within geometrically segmented white and dark blue paneling suggesting advanced input hardware interfacing with a decentralized autonomous organization ledger. This design evokes the tactile precision required for high-frequency options execution and derivative pricing models. The visual texture suggests durable electromechanical resilience necessary for maintaining high uptime across various market regimes like volatile spot price discovery or complex perpetual swap settlement. The integrated spherical mechanism mimics precise analogue control, symbolizing the granular adjustments in volatility surface mapping, vega hedging strategies, and the accurate oracle feed verification crucial for smart contract solvency in decentralized exchanges executing synthetic asset creation or complex option payoff structures.](https://crypto.greeks.live/wp-content/uploads/2025/10/Precision-Engineering-of-Decentralized-Finance-Option-Pricing-Oracles-Utilizing-Trackball-Input-Mechanics.jpg)

UTXO is an unspent output that serves as the input to a new transaction, which must be signed by the private key.

- 
### [What Is the “VIX” Index and How Does It Relate to Implied Volatility?](https://crypto.greeks.live/learn/what-is-the-vix-index-and-how-does-it-relate-to-implied-volatility/)
![A highly polished, faceted transparent structure resembling a digital instrument or quantum processor core intersects a flat, elongated teal component suggesting a stylized bond or delivery mechanism. This composition visualizes the intersection of immutable blockchain finality with structured finance constructs. The crystal suggests verifiable on-chain settlement layers and transparent smart contract execution, central to decentralized finance DeFi protocols. The teal element might represent tokenized real-world assets RWA or structured derivative tranches like perpetual futures contracts or synthetic asset collateral. The interplay signifies rigorous algorithmic pricing models underpinning decentralized exchange DEX liquidity provision and complex options strategies such as gamma exposure management within high-frequency trading HFT environments, emphasizing precision in staking yield optimization.](https://crypto.greeks.live/wp-content/uploads/2025/10/Crystalline-Ledger-Constructs-Intersecting-Aqua-Digital-Asset-Collateralization-Instruments.jpg)

The VIX is the market's 30-day forecast of S&P 500 volatility, calculated from the implied volatility of its options.

- 
### [What Is “Seigniorage” in the Context of Algorithmic Stablecoins?](https://crypto.greeks.live/learn/what-is-seigniorage-in-the-context-of-algorithmic-stablecoins-2/)
![This composition portrays a stylized intersection of mechanical precision and digital throughput indicative of complex financial engineering. A teal and deep blue spool, possibly representing pooled liquidity or collateralized assets within a DeFi yield farm, is bisected orthogonally by a narrow, light-toned strip suggesting a data feed or a specific tranche of tokenized securities. The dark background emphasizes the glowing cyan reflections off the material edges, conceptualizing the high-speed execution of exotic options or perpetual futures contracts. The structure suggests the intricate clearing process inherent in non-custodial swaps where underlying mechanisms require synchronized delivery versus payment structures for synthetic asset creation and settlement, mirroring advanced concepts like automated market maker capital lockup schedules and oracle price feed integrity during high volatility events.](https://crypto.greeks.live/wp-content/uploads/2025/10/Interlocking-Tangential-Data-Spools-Representing-Decentralized-Finance-Derivative-Contract-Settlement-Mechanisms.jpg)

The profit mechanism in algorithmic stablecoins where new coins are minted when demand is high, used to back the system or reward governance holders.

- 
### [What Is an “Oracle Update” and How Does It Relate to Contract Mutability?](https://crypto.greeks.live/learn/what-is-an-oracle-update-and-how-does-it-relate-to-contract-mutability/)
![This visualization depicts a complex electromechanical interface characterized by polished obsidian plating and sharply defined seams, highlighting glowing cyan crystalline nodes acting as data conduits. It symbolizes the atomic layer settlement mechanisms underpinning decentralized finance DeFi option contracts. The glowing elements represent secure cryptographic key exchange vital for atomic swaps and multi-signature execution within permissionless automated market makers AMMs. Precise alignment suggests deterministic finality necessary for T+0 settlement guarantees in high-frequency perpetual futures trading where latency mitigation is paramount for managing basis risk and slippage across various liquidity pools. The dark, particulate surface texture hints at the persistent, verifiable data layer of a distributed ledger technology DLT.](https://crypto.greeks.live/wp-content/uploads/2025/10/Quantum-Ledger-Integration-Point-Illuminated-Through-Encrypted-Digital-Infrastructure-Gateways.jpg)

Oracle updates feed price data; mutability allows developers to upgrade the underlying oracle integration logic for security or provider changes.

- 
### [What Is the Role of Session Keys in Symmetric Cryptography, and How Are They Used to Secure a Single Financial Transaction?](https://crypto.greeks.live/learn/what-is-the-role-of-session-keys-in-symmetric-cryptography-and-how-are-they-used-to-secure-a-single-financial-transaction/)
![This visualization depicts a sleek, metallic cylindrical structure, reminiscent of a high-velocity financial instrument, deploying luminous cyan aerodynamic control surfaces against a deep void. The precise intersecting fins suggest instantaneous state transition crucial for sophisticated trading architectures. This abstract mechanism embodies the rapid execution required for dynamic collateral adjustments within a collateralized debt position CDP or navigating complex options strike price shifts. The structure suggests robust engineering supporting high-frequency settlement processes, illustrating minimized slippage during volatile market regime shifts typical in yield farming strategies or managing perpetual swaps exposure across fragmented liquidity venues. The visual tension mirrors the risk management inherent in maintaining delta-neutral exposure following a major market event.](https://crypto.greeks.live/wp-content/uploads/2025/10/Aerodynamic-Fin-Deployment-Mechanism-Signaling-Liquidity-Pool-Rebalancing-in-Decentralized-Finance-Protocols.jpg)

A session key is a one-time-use symmetric key that is used to secure a single financial transaction, and is then thrown away.

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