What Is the Difference between an Algorithmic Stablecoin and a Fiat-Backed Stablecoin for Treasury Holdings? ▴ Learn

What Is the Difference between an Algorithmic Stablecoin and a Fiat-Backed Stablecoin for Treasury Holdings?

Fiat-backed stablecoins (like USDC) are collateralized 1:1 by traditional assets held in a bank, offering high stability and low risk for a treasury. Algorithmic stablecoins (less common now) rely on smart contracts and token mint/burn mechanics to maintain their peg, carrying a higher risk of de-pegging and volatility.

A treasury prioritizes the stability of fiat-backed stablecoins for operational funding.

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