A stablecoin is a type of digital asset designed to maintain a stable value—usually pegged to a fiat currency like the U.S. dollar. Unlike traditional cryptocurrencies like Bitcoin or Ethereum, stablecoins are not meant to fluctuate in price. Instead, they aim to function more like cash, just faster and more programmable.
Stablecoins are built on public blockchains (e.g. Ethereum, Solana) and are governed by smart contracts that manage issuance and redemptions. Their value is typically kept stable through reserves, which may include:
Each token represents a claim on a real-world dollar-equivalent asset held in reserve. These reserves are audited or attested to, depending on the issuer, and can sometimes be redeemed 1:1.
| Feature | Stablecoins (e.g. USDC) | Traditional Cash (USD) |
|---|---|---|
| Transfer Speed | Near-instant (24/7/365) | 1–3 days via bank wires/ACH |
| Access Hours | Always open | Bank hours only |
| Transparency | On-chain, visible to all | Private bank ledgers |
| Settlement Risk | Final within minutes | Possible delays, recalls |
| Programmability | Can be used in smart contracts | Not programmable |
Stablecoins vary based on who issues them and how they are backed:
| Issuer | Type of Backing | Governance Style | Notable Tokens |
|---|---|---|---|
| Circle | Cash + Treasuries | Private, U.S.-regulated | USDC |
| Tether | Mixed reserves | Offshore, less transparent | USDT |
| Wyoming State | 100% short-term Treasuries | Public, government-backed | WYT (Wyoming Token) |
| DAOs (e.g. MakerDAO) | Crypto-collateral | Decentralized governance | DAI |
We’ll explore the differences between these issuers, including legal safeguards and risk profiles, in a dedicated section.