What Are Stablecoins?
Learn why stablecoins exist, their explosive growth to a $320B market, and the role they play in modern crypto and global finance.
13 min · intermediate · part of Stablecoins & Pegged Assets
What you'll learn
- Introduction to Stablecoins
- Why Stablecoins Matter
- The Stablecoin Market in 2026
- How Stablecoins Maintain Their Peg
- Risks to Be Aware Of
- Practical Tips for Using Stablecoins
- For Deeper Reading
Key terms
- Stablecoin
- A blockchain-based token designed to maintain a stable value, typically pegged 1:1 to the U.S. dollar.
- Peg
- The target price a stablecoin aims to maintain, almost always $1.00 USD for the major dollar-denominated stablecoins.
- De-pegging
- When a stablecoin trades meaningfully above or below its target value, as USDC did at $0.87 on March 11, 2023.
- Arbitrage
- Risk-free profit from price differences. In stablecoins, the mint/redeem arbitrage between the open market and the issuer holds the peg.
- Reserve
- The pool of cash, Treasuries, and other liquid assets a fiat-backed stablecoin issuer holds to back tokens in circulation.
- Attestation
- An accountant’s confirmation that an issuer held specific reserves on a specific date. Less rigorous than a full financial audit but standard in the stablecoin industry.
- GENIUS Act
- The first U.S. federal stablecoin framework, signed by President Trump on July 18, 2025. Requires 100% reserve backing, monthly disclosures, and AML compliance.
- MiCA
- The EU’s Markets in Crypto-Assets regulation. Stablecoin rules (ARTs/EMTs) took effect June 30, 2024; broader CASP rules December 30, 2024.
- Tron (TRX)
- A high-throughput blockchain that hosts the majority of USDT supply (around $78B in early 2026) thanks to low fees.
- Mint and Redeem
- The two-sided process by which authorized participants create new stablecoins (sending $1 to the issuer) or destroy them (returning a stablecoin for $1).
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Open lessonEducational only — not financial advice.