What are stablecoins?
USDT and USDC aim to track the US dollar. Here's how they work and what to keep in mind.
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- Exprodus Editorial
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- 1 min read
A stablecoin is a digital asset designed to keep a steady value, usually one US dollar. Tether (USDT) and USD Coin (USDC) are two of the most widely used.
How they hold their value
The issuers of USDT and USDC say each token is backed by reserves such as cash and short-term government securities, and that tokens can be redeemed through the issuer. That backing is what's meant to keep the price close to $1.
What to keep in mind
- Stablecoins can briefly trade above or below $1, especially during market stress.
- Their stability depends on the issuer and its reserves.
- The same stablecoin can exist on several networks — always match the network when sending.
This article is for educational purposes only and isn't financial advice. Digital assets are highly volatile and their value can go down as well as up.
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