Stablecoin Glossary
Stablecoin
A stablecoin is a crypto asset designed to maintain a stable value relative to a specified asset, unit of account, or pool or basket of assets. Its stabilization mechanism can rely on reserve assets, collateral, redemption, market incentives, protocol rules, or a combination of these features.
Explanation
Stablecoins are generally recorded and transferred on distributed ledgers. Most outstanding stablecoins reference the US dollar, although other currencies, commodities, and baskets can serve as reference assets. Their structures vary materially. Some have an identifiable issuer that manages reserves and redemption. Others rely on crypto collateral, automated rules, or protocol-based incentives. The stablecoin label describes a stability objective. It does not establish that the token will remain at its target value under all market conditions.
Why it matters
The design determines where credit, liquidity, market, operational, and governance risks arise and how the token can function in payments, settlement, trading, or savings.
Example
US dollar stablecoins generally target a value of $1 per token, but the mechanisms used to support that target differ across issuers and protocols.
Related terms
Last reviewed: September 2026