What are the top algorithmic stablecoins?

As one of the top algorithmic stablecoins, Frax looks forward to serving the DeFi money market. It can offer effective services such as minting and redeeming the stablecoin alongside staking. Interestingly, the Frax protocol uses two different stable assets, such as the Frax stablecoin alongside the Frax Shares utility and governance token.

Are algorithmic stablecoins undercollateralized?

Algorithmic stablecoins are typically undercollateralized – they don’t have independent assets in reserves to back the value of their stablecoins. In fact, “undercollateralized stablecoins” and “algorithmic stablecoins” are often used interchangeably. What are algorithmic stablecoins? Algorithm can be an obfuscating word.

What are stablecoins and how do they work?

Stablecoins are digital assets designed to hold a certain value relative to a different asset, most commonly the U.S. dollar. They have become a popular way to hedge against crypto price risk and move funds across exchanges throughout the world.

What are fractional-algorithmic stablecoins?

Fractional-algorithmic stablecoins are partly collateralized, meaning they are somewhat backed by a real-world asset. Frax is an example of a fractional-algorithmic stablecoin, as it is partially backed by USD Coin, a stablecoin that is backed by the U.S dollar. In some cases, algorithmic stablecoins can be very beneficial.