[{"type":"paragraph","children":[{"text":"“Stablecoin” is a term almost everyone has heard by now. Since 2024, stablecoins have become the “stars” of the digital-asset family. But if you’re a beginner and haven’t dug in, you probably have lots of questions, like:"}]},{"type":"bulleted-list","children":[{"type":"list-item","children":[{"text":"What is a stablecoin?"}]},{"type":"list-item","children":[{"text":"Is it a special kind of cryptocurrency like BTC or ETH?"}]},{"type":"list-item","children":[{"text":"How are stablecoins different from ordinary crypto assets?"}]},{"type":"list-item","children":[{"text":"Which coins count as digital currencies?"}]}]},{"type":"paragraph","children":[{"text":"Today let’s walk through stablecoins from several angles and make their origins, mechanics, and future crystal clear."}]},{"type":"paragraph","children":[{"text":""}]},{"type":"heading-two","children":[{"text":"What is a stablecoin, and why does it matter?"}]},{"type":"paragraph","children":[{"text":"As the name suggests, a stablecoin is a “price-stable digital currency.” Its price is typically pegged to some real-world asset, for example:"}]},{"type":"bulleted-list","children":[{"type":"list-item","children":[{"text":"USD stablecoins: The most common — USDT, USDC, BUSD — generally maintain a 1:1 exchange rate with the U.S. dollar."}]},{"type":"list-item","children":[{"text":"Commodity-backed stablecoins: e.g., PAX Gold, pegged to gold."}]},{"type":"list-item","children":[{"text":"Other reference baskets: Some coins track a basket of assets or an index, similar to the IMF’s SDR (Special Drawing Rights)."}]}]},{"type":"paragraph","children":[{"text":"Stablecoins were created to:"}]},{"type":"bulleted-list","children":[{"type":"list-item","children":[{"text":"Provide a stable unit of account for the crypto market;"}]},{"type":"list-item","children":[{"text":"Enable fast trading, payments, and storage inside crypto rails."}]}]},{"type":"paragraph","children":[{"text":"Imagine trading on an exchange: without stablecoins, after selling BTC you’d have to withdraw into fiat — slow and cumbersome. With stablecoins, you can rotate positions in seconds and switch back to BTC anytime."}]},{"type":"paragraph","children":[{"text":"Or think cross-border payments: banks use SWIFT, fees run into tens of dollars, and settlement takes 2–3 days. With a stablecoin, you can send USDT worth $10,000 across the planet in minutes for under $1 in fees."}]},{"type":"paragraph","children":[{"text":"That’s why many say: without stablecoins, the crypto market wouldn’t function. It sounds like hyperbole — until you think it through:"}]},{"type":"bulleted-list","children":[{"type":"list-item","children":[{"text":"Option 1 without stablecoins: volatile crypto like BTC/ETH — up 10% today, down 20% tomorrow — even simple payments carry big risk."}]},{"type":"list-item","children":[{"text":"Option 2: traditional fiat like USD/CNY — but fiat doesn’t natively move on-chain. To use it onchain you need banks and payment rails — expensive, slow, and often inaccessible."}]}]},{"type":"paragraph","children":[{"text":"Stablecoins’ mission is simple: bring the stability of real-world value (e.g., dollars) directly onto the blockchain. In other words, they’re the “on-chain stand-in” for dollars (or other assets)."}]},{"type":"paragraph","children":[{"text":""}]},{"type":"heading-two","children":[{"text":"The three main stablecoin models"}]},{"type":"paragraph","children":[{"text":"Over a decade of evolution has yielded three broad categories:"}]},{"type":"paragraph","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"1) Fiat-collateralized stablecoins"}]},{"type":"paragraph","children":[{"text":"The most traditional — and largest — model. USDT, USDC, BUSD are typical. The idea is straightforward: the issuer holds dollars in a bank account and mints an equal amount of stablecoins on-chain. Deposit $1,000,000, and you receive 1,000,000 USDT."}]},{"type":"bulleted-list","children":[{"type":"list-item","children":[{"text":"Pros: Simple and direct; price stability is strong — 1 USDT ≈ $1."}]},{"type":"list-item","children":[{"text":"Cons: Requires trust in the issuer. Tether (USDT) has repeatedly faced scrutiny over reserve transparency."}]}]},{"type":"paragraph","children":[{"text":"Think of it as a blockchain deposit receipt for dollars."}]},{"type":"paragraph","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"2) Crypto-collateralized stablecoins"}]},{"type":"paragraph","children":[{"text":"Representative: DAI. Similar logic, but reserves are on-chain crypto (e.g., ETH, USDC), not bank dollars. You deposit $150 worth of ETH into a smart contract to mint $100 of DAI. Why over-collateralize? Crypto is volatile; the buffer helps DAI hold its peg."}]},{"type":"bulleted-list","children":[{"type":"list-item","children":[{"text":"Pros: No banks; runs fully on-chain; aligns with decentralization."}]},{"type":"list-item","children":[{"text":"Cons: Lower capital efficiency due to over-collateralization."}]}]},{"type":"paragraph","children":[{"text":"Think of it as blockchain-native collateralized lending."}]},{"type":"paragraph","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"3) Algorithmic stablecoins"}]},{"type":"paragraph","children":[{"text":"The most idealistic model: no collateral, just supply–demand algorithms to maintain the peg. If price > $1, expand supply; if price < $1, contract supply."}]},{"type":"bulleted-list","children":[{"type":"list-item","children":[{"text":"Pros: Maximum decentralization; no reserves needed."}]},{"type":"list-item","children":[{"text":"Cons: Easily destabilized — once confidence breaks, a death spiral can occur. UST is the cautionary tale."}]}]},{"type":"paragraph","children":[{"text":"Think of it as a “central-bank monetary policy experiment” — with outcomes that have often been disastrous. There’s no algorithmic model with broad, lasting consensus today.\n"}]},{"type":"heading-two","children":[{"text":"How stablecoins work"}]},{"type":"paragraph","children":[{"text":"To keep prices stable, stablecoins rely on collateral + on-chain issuance + circulation + redemption/burn:"}]},{"type":"paragraph","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"1. Post collateral"}]},{"type":"bulleted-list","children":[{"type":"list-item","children":[{"text":"Fiat-backed: Users/issuers place dollars in bank custody; attestations are provided."}]},{"type":"list-item","children":[{"text":"Crypto-backed: Users deposit ETH, BTC, etc. into a smart contract."}]}]},{"type":"heading-three","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"2. Mint tokens"}]},{"type":"paragraph","children":[{"text":"Once reserves are secured, an equal amount of stablecoins is minted on-chain."}]},{"type":"heading-three","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"3. Market circulation"}]},{"type":"bulleted-list","children":[{"type":"list-item","children":[{"text":"Users trade, pay, and transfer freely."}]},{"type":"list-item","children":[{"text":"Stablecoins serve as the quote currency across exchanges."}]}]},{"type":"heading-three","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"4. Redeem & burn"}]},{"type":"paragraph","children":[{"text":"When users redeem dollars or collateral, stablecoins are burned to prevent over-issuance."}]},{"type":"paragraph","children":[{"text":"\nIt looks simple, but sustained stability is hard — it hinges on reserve management and market confidence.\n"}]},{"type":"heading-two","children":[{"text":"Risks and controversies"}]},{"type":"paragraph","children":[{"text":"Stablecoins are essential, but not risk-free:"}]},{"type":"heading-three","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"1. Reserve transparency"}]},{"type":"paragraph","children":[{"text":"USDT has faced long-running questions about reserves. While Tether has published attestations, doubts persist."}]},{"type":"heading-three","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"2. Centralization risk"}]},{"type":"paragraph","children":[{"text":"Fiat-backed coins depend on banks; regulators can freeze funds. USDC has frozen certain addresses before."}]},{"type":"heading-three","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"3. Algorithmic fragility"}]},{"type":"paragraph","children":[{"text":"UST’s collapse shattered confidence in algorithmic pegs — tens of billions vaporized."}]},{"type":"heading-three","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"4. Regulatory uncertainty"}]},{"type":"paragraph","children":[{"text":"The U.S., EU, and Japan are all iterating rules. Stablecoins could be treated as “securities” or “deposits,” with tighter oversight ahead."}]},{"type":"paragraph","children":[{"text":""}]},{"type":"heading-two","children":[{"text":"What are stablecoins used for?"}]},{"type":"paragraph","children":[{"text":"Stablecoins are far more than “digital dollars.” They power trading and settlement and permeate DeFi, NFTs, cross-border payments, hedging, and more."}]},{"type":"heading-three","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"1. Trading & settlement"}]},{"type":"paragraph","children":[{"text":"Nearly all pairs quote in USDT/USDC. High liquidity and low volatility let users rotate assets quickly without outsized mark-to-market risk."}]},{"type":"heading-three","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"2. Cross-border payments"}]},{"type":"paragraph","children":[{"text":"In regions with weak fiat rails or FX controls (parts of Africa/SEA), users lack dollar accounts and access to global settlement. Stablecoins offer fast, low-cost international transfers."}]},{"type":"heading-three","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"3. DeFi’s foundation"}]},{"type":"paragraph","children":[{"text":"Lending, liquidity mining, and derivatives all rely on stablecoins. Deposit USDC to earn yield or use it as collateral — stablecoins are DeFi’s unit of account."}]},{"type":"heading-three","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"4. NFT & GameFi payments"}]},{"type":"paragraph","children":[{"text":"Paying with stablecoins avoids price swings. Users top up with USDT/USDC to buy items/NFTs, keeping purchasing power steady."}]},{"type":"heading-three","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"5. Safe harbor in volatility"}]},{"type":"paragraph","children":[{"text":"During sharp moves, investors rotate into stablecoins as a short-term safe haven."}]},{"type":"heading-three","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"6. Smart-contract settlement & automation"}]},{"type":"paragraph","children":[{"text":"Stablecoins often settle smart-contract flows. In AMMs, pairing with stables keeps prices more orderly and reduces slippage."}]},{"type":"heading-three","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"7. Enterprise & institutional settlement"}]},{"type":"paragraph","children":[{"text":"Crypto firms and funds settle large transfers on-chain in minutes — far faster than bank wires."}]},{"type":"heading-three","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"8. Portfolio hedging & allocation"}]},{"type":"paragraph","children":[{"text":"Stablecoins serve as the defensive leg in multi-asset portfolios, dampening overall volatility."}]},{"type":"heading-three","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"9. On-chain rewards & incentives"}]},{"type":"paragraph","children":[{"text":"Projects pay contributors/miners with stablecoins to keep reward value predictable."}]},{"type":"heading-three","children":[{"text":""}]},{"type":"heading-three","children":[{"text":"10. Fiat on-ramps"}]},{"type":"paragraph","children":[{"text":"Stablecoins are the gateway for fiat onto blockchains: swap USD/EUR into stablecoins and participate on-chain without bank friction."}]},{"type":"paragraph","children":[{"text":"\n"}]},{"type":"heading-two","children":[{"text":"Conclusion"}]},{"type":"numbered-list","children":[{"type":"list-item","children":[{"text":"Stablecoins may look like “digital dollars,” but their significance goes much further. They’re the bedrock of DeFi, the bridge for cross-border payments, and the interface between traditional finance and crypto."}]},{"type":"list-item","children":[{"text":"Because of stablecoins, crypto functions as a complete financial system. Whether regulation tightens or technology evolves, stablecoins will remain central."}]},{"type":"list-item","children":[{"text":"In one line: If Bitcoin is crypto’s gold, stablecoins are crypto’s blood."}]}]},{"type":"paragraph","children":[{"text":""},{"type":"topic","character":"Ju","children":[{"text":""}]},{"text":" "},{"type":"topic","character":"JuExchange","children":[{"text":""}]},{"text":" "},{"type":"topic","character":"Education","children":[{"text":""}]},{"text":" "},{"type":"topic","character":"Stablecoin","children":[{"text":""}]},{"text":" \n\n"}]}]