Stablecoins are a type of cryptocurrency designed to maintain a stable value relative to a specific asset or a basket of assets, typically fiat currencies like the US dollar. Their primary purpose is to reduce the volatility often associated with cryptocurrencies, making them more suitable for transactions and as a store of value.

Features of stable coins

• Pegged Value: Stablecoins are usually pegged to a fiat currency (e.g., USD) or commodities (e.g., gold) at a 1:1 ratio, meaning one stablecoin is worth one unit of the pegged asset.

• Transparency: Many stablecoin issuers provide regular audits and reports to verify that the reserves backing the stablecoin are sufficient.

• Use Cases: They are used for trading, remittances, lending, and as a stable medium of exchange in decentralized finance (DeFi)

Types of Stablecoins:

1. Fiat-Collateralized Stablecoins: Backed by reserves of fiat currency held in a bank or with a custodian. Examples include:

   • Tether (USDT)

   • USD Coin (USDC)

2. Crypto-Collateralized Stablecoins: Backed by other cryptocurrencies, often over-collateralized to absorb price volatility. Examples include:

   • Dai (DAI), which is backed by Ethereum and other assets through smart contracts.

3. Algorithmic Stablecoins: Not backed by collateral but use algorithms and smart contracts to control supply and demand to stabilize their price. Examples include:

   • Ampleforth (AMPL)

   • TerraUSD (UST) (historically, but has faced challenges)

Stablecoins play a crucial role in the cryptocurrency ecosystem by providing a stable medium for transactions and serving as a bridge between traditional finance and the digital asset world.

This section provides an overview of the stablecoins tracked in this dashboard, highlighting their acronyms and meanings:

1. USDC (USD Coin)
   A digital dollar stablecoin backed by US dollar reserves, issued by regulated financial institutions.

2. USDT (Tether)
   A widely used stablecoin that aims to maintain a 1:1 peg with the US dollar, issued by Tether Limited.

3. PAI (Parrot USD)
   A stablecoin issued by the Parrot Protocol, designed to maintain its value relative to the US dollar.

4. PYUSD (PayPal USD)
   A stablecoin introduced by PayPal, pegged to the US dollar, allowing users to transact in a digital currency.

5. USDE (Ethena USD)
   A stablecoin aimed at maintaining its value equivalent to the US dollar, associated with the Ethena platform.

6. USDY (Ondo US Dollar Yield)
   A stablecoin designed to provide yield on US dollar deposits, issued by Ondo Finance.