What Is a Key Difference between Collateralized and Algorithmic Stablecoin Stability Mechanisms? ▴ Learn

What Is a Key Difference between Collateralized and Algorithmic Stablecoin Stability Mechanisms?

Collateralized stablecoins maintain their peg by backing each token with assets (fiat, crypto, or commodities) held in reserve. Stability relies on the value and integrity of this collateral.

Algorithmic stablecoins, in contrast, rely on automated smart contract rules to manage supply and demand, often using a secondary token, without direct 1:1 asset backing.

What Is the Primary Difference between a “Synthetic” Asset and a “Wrapped” Asset in Terms of Backing?

How Does the Maturity Date of Reserve Assets (E.g. Treasury Bills) Impact Reserve Liquidity?

What Is the Role of a Prime Broker in Managing a Stablecoin’s Reserve Liquidity?

What Is the Difference between Circulating Supply and Total Supply in Crypto?