What is a stablecoin in cryptocurrency?

A stablecoin is a type of cryptocurrency designed to have a stable value, often pegged to a fiat currency like the US dollar or a basket of assets. The primary goal of stablecoins is to minimize the volatility typically associated with cryptocurrencies like Bitcoin or Ethereum. Stablecoins are commonly used for trading, remittances, or as a store of value within the cryptocurrency ecosystem. There are various types of stablecoins, including fiat-collateralized stablecoins (e.g., USDT), crypto-collateralized stablecoins (e.g., DAI), and algorithmic stablecoins, which use algorithms to control their supply and maintain price stability. Despite their stability, stablecoins still carry risks, such as the need for transparency and the potential for regulatory scrutiny.