StablecoinsBeginner9 min
What is a Stablecoin? (How they work — Animated)
By Whiteboard Crypto
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Video by Whiteboard Crypto · All rights reserved to original creator.
Summary
Stablecoins aim to hold a stable value (usually $1) while living on a blockchain. Whiteboard Crypto explains the three main types: fiat-collateralized (USDC, USDT), crypto-collateralized (DAI), and algorithmic (like the failed TerraUSD). Each has different risks.
Key Concepts
StablecoinFiat-collateralizedCrypto-collateralizedAlgorithmicPegUSDCDAI
Things To Remember
- Fiat-collateralized stablecoins are backed 1:1 by dollars in a bank account.
- Crypto-collateralized stablecoins (DAI) use over-collateralization to maintain their peg.
- Algorithmic stablecoins are the riskiest — TerraUSD collapsed in 2022, losing ~$40B.
- Even 'stable' coins can de-peg during extreme market conditions.
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Attribution: This video was created by Whiteboard Crypto. All rights belong to the original creator. Crypto Education does not claim ownership of this content.