What is a stablecoin?

Stablecoins are cryptocurrencies that are usually pegged to a fiat currency, such as the dollar. The most high profile stablecoin is Tether, of which there is around $75 billion (€71.22 billion) in circulation. This makes it the third biggest cryptocurrency behind Bitcoin and Ethereum.

What happens if cryptocurrencies collapse?

The collapse brings highfalutin cryptocurrency ideals back to earth. So-called stablecoins play a pivotal role in crypto markets. Traders use them to store idle cash and avoid the cost and inconvenience of moving dollars into and out of exchanges. Holders can also earn interest by lending out their tokens.

Why is terrausd a stablecoin?

The direct peg to a more stable asset allows market participants to use stablecoins when crypto price swings become difficult to manage. TerraUSD (UST) is an algorithmic stablecoin issued and backed through the Terra (LUNA) ecosystem.

Are collateralized stablecoins the future?

But it doesn’t take very many pennies off the peg to vaporize market confidence for a stablecoin. The market is clearly showing us that collateralized stablecoins are the future,” says Andrew Pesco, head of investment management at Domain Money. Collateralized stablecoins like USD Coin (USDC) have proven to be resilient this week.