Kiplinger

Stablecoins: Definition and How They Work

Over the last few years, through surging market highs and painful downturns, stablecoins have become an integral part of both the DeFi and broader cryptocurrency ecosystems. With a total market cap of over $150 billion, stablecoins have drawn crypto novices and experienced investors alike, enthralled by their compelling value proposition: the stability of a traditional low-risk asset with the flexibility of a digital currency. But with the recent crash of the once-revered Terra ecosystem, stablecoins have found themselves under heavy scrutiny, with many investors looking for answers regarding their safety and utility.

What Is a Stablecoin?

A stablecoin is a type of cryptocurrency whose value is pegged to an external, generally stable, asset class

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