Stablecoin Glossary
Fiat-Backed Stablecoin
A fiat-backed stablecoin is a stablecoin supported by reserves denominated in a sovereign currency.
Explanation
These stablecoins maintain price stability by holding reserve assets such as bank deposits or government securities. Each token is typically redeemable for a corresponding amount of fiat currency.
Why it matters
Fiat-backed stablecoins dominate the current stablecoin market and are widely used for payments and trading.
Example
USDC and USDT are examples of fiat-backed stablecoins.
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