Stablecoins for Beginners
Stablecoins peg to assets like USD to offer price stability for trading, payments, and DeFi. You'll learn types, risks, and practical ways to use them safely.
Who Is This For?
- •Beginners tired of volatility but wanting to stay in crypto
- •Users preparing to interact with DeFi using stable assets
Learning Objectives
- 1.Differentiate fiat-backed, crypto-backed, and algorithmic stablecoins
- 2.Identify key risks like depegs and centralization
- 3.Use stablecoins for transfers, trading, and yield with caution
Stablecoin Types
Not all stablecoins are created equal. They differ in how they maintain their peg—and that affects their risk profile, decentralization, and use cases.
🏛️ Three Types of Stablecoins
Fiat-Backed Stablecoins
Backed 1:1 by real dollars held in bank accounts. The simplest model but requires trusting the issuer.
HOW IT WORKS
- • Company holds $1 in bank for each token
- • Users can redeem tokens for real USD
- • Regular audits verify reserves
EXAMPLES
📊 Compare Stablecoins
Click a stablecoin to see detailed analysis:
USD Coin
1:1 USD reserves (cash + T-bills)
PROS
- Monthly attestations by auditors
- Regulated issuer (Circle)
- Wide acceptance
CONS
- Centralized—can freeze addresses
- Requires trust in Circle
- Bank exposure risk
How People Use Stablecoins
Stablecoins aren't just for holding—they're the backbone of crypto commerce, DeFi, and global payments.
🎯 Common Use Cases
Select a use case to learn more:
Trading Flow
Park in stable during dips, rebuy later
Payment Flow
Instant global transfer, minimal fees
DeFi Flow
Deposit stable, earn interest
Managing Risks
Stablecoins aren't risk-free. Understanding the risks helps you protect your funds and make informed choices.
🔻 Depeg Event Simulation
A "depeg" is when a stablecoin loses its $1 peg. Watch what happens during a crisis:
⚠️ Real example: In March 2023, USDC briefly dropped to $0.87 when Silicon Valley Bank (holding $3.3B of reserves) collapsed. It recovered within days, but holders experienced temporary losses.
🔍 Risk Factor Checklist
Toggle risk factors to see how they compound:
🛡️ Safety Best Practices
- Diversify: Don't put all funds in one stablecoin
- Research: Check reserve reports and audit history
- Monitor: Watch for news about issuers and peg stability
- Limit exposure: Only hold what you need for near-term use
Common Mistakes & Gotchas
These misconceptions can cost you money. Learn from others' mistakes:
⚠️ Remember: "Stable" doesn't mean "risk-free." Even the biggest stablecoins have experienced depegs, regulatory issues, and technical problems. Stay informed.
Knowledge Check
Let's see how well you understand stablecoins.
What backs fiat-collateralized stablecoins like USDC?
Why does DAI require overcollateralization (e.g., 150%)?
What is a key risk of algorithmic stablecoins?
What can centralized stablecoin issuers (like Circle) do?
When parking funds in stablecoins, what should you check?