The 4 Different Types of Crypto Stablecoins Explained

Stablecoins don't just come in one form. Different stablecoins have their own dynamics, benefits, and drawbacks depending on what category they fall into. Fiat-backed stablecoins are more stable than traditional cryptocurrencies. Crypto-backed coins are backed by cryptocurrencies, not physical commodities. Algorithmic stablecoins aren't backed by other assets, but are pegged to an algorithm to maintain value. Stable coins can be pegged to and backed by any asset that isn't itself backed by a physical commodity, such as gold, silver, or real estate, as well as the value of these assets. For example, one USDC is backed in a 1:1 ratio to the U.S. dollar, so for every single USDC that goes into circulation, one USDC is kept in reserve. Source