Stablecoins are the quiet workhorse of crypto: tokens designed to hold a steady value, usually one dollar. They're used for trading, payments, savings, and moving money between exchanges without the price swings of bitcoin or ether.

What "pegged" actually means

A peg is a promise about value, not a guarantee of price. The token is designed to trade near $1, and the issuer uses different methods to keep it there. When the peg works, you can treat 1 USDT or 1 USDC as roughly $1 for practical purposes.

The main types

  • Fiat-backed (USDT, USDC): each token is backed by reserves held by the issuer. The most widely used, and the type regulators focus on.
  • Crypto-collateralized (DAI-style): over-collateralized with other crypto to absorb price moves.
  • Algorithmic: no collateral — the model maintains the peg. The riskiest kind; several have collapsed in past cycles.

What they're used for

In practice, stablecoins are the fuel for most crypto trading and for sending value cheaply between networks. Adoption has also grown in payments and savings in some markets, which is part of why regulators are paying close attention.

The risks to know

Stable isn't guaranteed. Reserves can be mismanaged or unaudited, a peg can de-peg during stress, and holding a stablecoin still carries the same wallet risks as any crypto. Always check an issuer's disclosures — and never trust a "stablecoin" that promises yield without explaining where it comes from.

Simple rule A stablecoin is only as stable as its reserves and its governance. For important amounts, favor the largest, most transparent fiat-backed issuers — and don't confuse "pegged" with "risk-free."

Wherever you move stablecoins, the network you choose affects your fees — that's the topic of our gas fees explainer.