What is Stable Coin?
A stable coin is a type of cryptocurrency whose value usually relies on a different range of assets, such as government currencies such as the dollar or precious metals such as gold.
Exporters adopt various methods to maintain the price of stable coins. Some stable currencies, such as the USDT, USDC, BUSD, and GUSD, have one-to-one support with the US dollar. Other stable coins, such as tether gold, also support physical commodities such as an ounce of gold.
There are also decentralized stable coins such as DAI and FEI that are based on different algorithms.
Before the advent of stable coins, most people traded cryptocurrencies in government currencies, or fiat currencies or other cryptocurrencies. Pankaj Balani, CEO of Delta Exchange cryptocurrency exchange, said that since 2017, cash transactions with stable coins began and accounted for a large share of transactions.
Cryptocurrency trading using stable coins is a faster and cheaper option compared to Fiat currencies and allows for more liquidity. Stable coins, unlike other cryptocurrencies, are theoretically less prone to market fluctuations.
Stable coins are also used to lend cryptocurrencies. You can receive 4% annual interest from depositing USDC in CoinBase savings accounts. The USDT deposit interest rate can also be from 1.66 to 13.5 percent.