What is a stablecoin based on?

What this means is that a stablecoin pegged to, say, the U.S. dollar on a one-to-one basis should always be equal to $1. That’s the goal, at least. Stablecoins play an important role in the crypto economy, namely to facilitate transactions and purchases. Some stablecoins are backed by cash and cash equivalents; others are backed by noncash assets.

Is Dai a stablecoin?

For example, MakerDAO's Dai ( DAI) stablecoin is pegged to the U.S. dollar but backed by Ethereum ( ETH) and other cryptocurrencies worth 150% of the DAI stablecoin in circulation. Algorithmic stablecoins may or may not hold reserve assets.

What is APY & how does it work?

APY is the actual rate of return that will be earned in one year if the interest is compounded. Compound interest is added periodically to the total invested, increasing the balance. That means each interest payment will be larger, based on the higher balance. The more often interest is compounded, the higher the APY will be.

Do banks have APY?

Banks in the U.S. are required to include the APY when they advertise their interest-bearing accounts. That tells potential customers exactly how much money a deposit will earn if it is deposited for 12 months. Savings or checking accounts may have either a variable APY or fixed APY.