Stablecoin
A crypto token designed to hold a steady value, usually pegged to the US dollar and backed by reserves.
A stablecoin is a token designed to keep a stable price, most often one US dollar. Issuers aim to maintain the peg through reserves such as cash and short-term Treasuries, or through algorithmic mechanisms. The quality of the reserves and the redemption rights determine how well the peg holds under stress.
On our site, stablecoin prices are shown against the dollar. Small deviations are normal; a sustained discount below par signals that holders doubt redemption at full value.
Traders care because stablecoins are the main cash leg of crypto trading and the funding currency for many venues. A depeg can drain liquidity across the market quickly.
Worked example (illustrative numbers, not real data): a stablecoin trades at 0.995 dollars for several weeks, a 0.5 percent discount. If the discount widens to 0.97 during a stress event, a holder who sells needs to accept 3 cents of loss on every dollar of tokens.