What Is the Difference between a Stablecoin and a Volatile Payment Token in Terms of Utility?
A stablecoin's utility is price stability, serving as a reliable unit of account and medium of exchange that minimizes the risk of loss from volatility. A volatile payment token, such as a Layer 1 native asset, also functions as a medium of exchange but carries the risk and potential reward of price appreciation/depreciation.
Users prefer stablecoins for transactional utility where price certainty is required, and volatile tokens where the payment also serves as a necessary transaction fee.
