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[catol]

What is stablecoin? What is its function?

Stablecoins are digital assets designed to mimic the exchange rate of fiat currencies such as the dollar or euro. They allow the user to quickly and easily exchange stable currencies anywhere in the world.

As a medium of exchange, cryptocurrencies are technologically more convenient. However, fluctuations in their value ultimately made them an extremely risky investment opportunity as well as an inconvenient means of making payments. By the time the transaction is completed, the value of the sent coins may differ significantly from the original.

In turn, stablecoin does not have such a problem. This type of asset tracks insignificant price movements and changes in the value of the underlying asset or the fiat currency that they emulate. As such, stablecoins act as a safe haven asset amid volatile markets.

There are several types of stablecoins, each of which has a different peg of its units to fiat currency.

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[capterra]

What are these types and what are their functions?

[SunRey]

What are these types and what are their functions?

The most popular type of stablecoin is one that is directly pegged to fiat currency at a 1: 1 ratio. We also call this fiat-backed stablecoins. The central issuer (or bank) stores a certain amount in reserve currency and issues a proportional amount of tokens.

[doingitnow]

What are these types and what are their functions?

The most popular type of stablecoin is one that is directly pegged to fiat currency at a 1: 1 ratio. We also call this fiat-backed stablecoins. The central issuer (or bank) stores a certain amount in reserve currency and issues a proportional amount of tokens.

For example, an issuer might have one million dollars and distribute one dollar for each of the million tokens. Thanks to this, users can exchange their cryptocurrencies for tokens at any time, the value of which is equivalent to the US dollar.

[Elisabeth]

What are these types and what are their functions?

The most popular type of stablecoin is one that is directly pegged to fiat currency at a 1: 1 ratio. We also call this fiat-backed stablecoins. The central issuer (or bank) stores a certain amount in reserve currency and issues a proportional amount of tokens.

For example, an issuer might have one million dollars and distribute one dollar for each of the million tokens. Thanks to this, users can exchange their cryptocurrencies for tokens at any time, the value of which is equivalent to the US dollar.

In this case, there is a high counterparty risk that cannot be mitigated: in the end, you always have to trust the issuer, while the user himself cannot determine exactly whether the issuer of stablecoins maintains its reserve fund.

[rygarthecoder]

What are these types and what are their functions?

The most popular type of stablecoin is one that is directly pegged to fiat currency at a 1: 1 ratio. We also call this fiat-backed stablecoins. The central issuer (or bank) stores a certain amount in reserve currency and issues a proportional amount of tokens.

For example, an issuer might have one million dollars and distribute one dollar for each of the million tokens. Thanks to this, users can exchange their cryptocurrencies for tokens at any time, the value of which is equivalent to the US dollar.

In this case, there is a high counterparty risk that cannot be mitigated: in the end, you always have to trust the issuer, while the user himself cannot determine exactly whether the issuer of stablecoins maintains its reserve fund.

At best, such a company can try to be as transparent as possible when it comes to auditing, but the system is still far from such a property as credibility.

[Daimonion]

The crypto-backing of stablecoins mirrors their fiat counterparts, with the main difference being that the cryptocurrency is used as collateral. However, due to the fact that cryptocurrency is digital, only smart contracts handle the issue of units.

[greenbo00]

The crypto-backing of stablecoins mirrors their fiat counterparts, with the main difference being that the cryptocurrency is used as collateral. However, due to the fact that cryptocurrency is digital, only smart contracts handle the issue of units.

Crypto-backed stablecoins minimize the necessary trust, for this reason it should be noted that their monetary policy is determined by the voters, by analogy with government structural elements.

[Rufus]

The crypto-backing of stablecoins mirrors their fiat counterparts, with the main difference being that the cryptocurrency is used as collateral. However, due to the fact that cryptocurrency is digital, only smart contracts handle the issue of units.

Crypto-backed stablecoins minimize the necessary trust, for this reason it should be noted that their monetary policy is determined by the voters, by analogy with government structural elements.

In this case, you cannot completely trust the issuer, but you believe that all network participants will always act in the interests of users.

[catol]

The crypto-backing of stablecoins mirrors their fiat counterparts, with the main difference being that the cryptocurrency is used as collateral. However, due to the fact that cryptocurrency is digital, only smart contracts handle the issue of units.

Crypto-backed stablecoins minimize the necessary trust, for this reason it should be noted that their monetary policy is determined by the voters, by analogy with government structural elements.

In this case, you cannot completely trust the issuer, but you believe that all network participants will always act in the interests of users.

What does it take to get this kind of stablecoin?

[SunRey]

In order to get this kind of stablecoins, users block a special cryptocurrency in the contract, which then issues a certain number of requested coins.

[rygarthecoder]

In order to get this kind of stablecoins, users block a special cryptocurrency in the contract, which then issues a certain number of requested coins.

In the future, to return the collateral, users send stablecoins to the same contract for reverse currency exchange (taking into account various commissions or interest rates).

[peter054]

In order to get this kind of stablecoins, users block a special cryptocurrency in the contract, which then issues a certain number of requested coins.

In the future, to return the collateral, users send stablecoins to the same contract for reverse currency exchange (taking into account various commissions or interest rates).

Algorithmic stablecoins are not pegged to fiat or cryptocurrency. Instead, price stability is achieved solely by algorithms and smart contracts that manage the delivery of the token issue.

[Rufus]

In order to get this kind of stablecoins, users block a special cryptocurrency in the contract, which then issues a certain number of requested coins.

In the future, to return the collateral, users send stablecoins to the same contract for reverse currency exchange (taking into account various commissions or interest rates).

Algorithmic stablecoins are not pegged to fiat or cryptocurrency. Instead, price stability is achieved solely by algorithms and smart contracts that manage the delivery of the token issue.

From a functional point of view, their monetary policy has similarities with the management of national currencies represented by central banks.

[capterra]

At its core, the algorithmic stablecoin system reduces the supply of tokens if the price falls below the value of the monitored fiat currency. If the price exceeds the required value of the pegged currency, then new tokens come into circulation in order to reduce the cost of the stablecoin.

[Elisabeth]

At its core, the algorithmic stablecoin system reduces the supply of tokens if the price falls below the value of the monitored fiat currency. If the price exceeds the required value of the pegged currency, then new tokens come into circulation in order to reduce the cost of the stablecoin.

You may have heard of this category of tokens called unsecured stablecoins.

[greenbo00]

At its core, the algorithmic stablecoin system reduces the supply of tokens if the price falls below the value of the monitored fiat currency. If the price exceeds the required value of the pegged currency, then new tokens come into circulation in order to reduce the cost of the stablecoin.

You may have heard of this category of tokens called unsecured stablecoins.

From a technical point of view, this is an incorrect statement, since their value is provided by a certain mechanism, which in its qualities is analogous to the collateral, which is a strong distinguishing element from the previous types.

[riefly]

Will I be able to buy coins only after premine?

[peter054]

Will I be able to buy coins only after premine?

I think yes. Because they are not sold anywhere now and premine only for team members.

[bbtou]

At the beginning of the era of cryptocurrencies, mining was super profitable. An ordinary processor was enough to mine bitcoin, and as many as 50 coins were given for a solved block. Nowadays, the main cryptocurrency can be mined only with the help of expensive ASIC devices.