Stablecoins, explained.One dollar, if the promise holds.
A stablecoin is a token designed to keep a steady value, usually one US dollar or one euro. The peg is not magic. It holds because someone will swap the token for the reference currency, or because traders profit from closing the gap. How that works, and how well, depends on the design.
Reviewed October 19, 2026 · figures from our live data
The short answer
Fiat-backed stablecoins hold cash and short-term government bills. The issuer redeems tokens for money, usually only for verified customers.
Crypto-backed stablecoins lock more crypto than they issue. If collateral falls too far, positions are liquidated to protect the peg.
Synthetic designs use hedges or algorithms. They can work, but some have failed badly when demand collapsed.
In the EU, MiCA applies to stablecoins since 30 June 2024. Issuers of e-money tokens must be authorized and hold reserves.
payment stablecoins in our data today
issuers
issuer countries
How the main designs hold the peg
Every design answers one question: what happens when many holders want out at once?
- 1
Fiat-backed
Reserves of bank deposits and treasury bills sit with custodians. Approved customers mint and redeem at par, and traders arbitrage small gaps on exchanges.
- 2
Crypto-collateralized
Users lock crypto in a smart contract and mint stablecoins against it, with a buffer. Liquidations sell collateral if its value drops.
- 3
Synthetic or delta-neutral
The issuer holds crypto and an offsetting short position, often in derivatives. The peg depends on hedges, exchanges and funding rates.
- 4
Algorithmic
Supply expands and contracts through a second token. Without real reserves, a loss of confidence can trigger a spiral.
- 5
Commodity-backed
Some tokens track gold or other assets rather than a currency. They are stable relative to that asset, not to the dollar.
- 6
Tokenized deposits
Issued by banks as a claim on a deposit. They are closer to bank money than to stablecoins and may fall under deposit protection.
Why pegs break and what to check
Depegs are usually short. Some are permanent. These are the signals.
- 1
Reserve quality
Cash and short treasury bills are safer than commercial paper, loans or the issuer’s own tokens. Read the reserve report.
- 2
Attestations and audits
Regular third-party attestations show reserves at a point in time. A full audit goes further. Check how often they appear.
- 3
Redemption access
If only large verified customers can redeem, smaller holders depend on exchange prices during stress.
- 4
Bank and custodian risk
Reserves held at a failing bank can cause a temporary depeg even when the issuer is solvent.
- 5
Regulatory status
Check whether the issuer is authorized where you are. Under MiCA, exchanges in the EU may delist non-compliant stablecoins.
- 6
Freeze powers
Most fiat-backed stablecoins can freeze addresses. That supports law enforcement but means your tokens can be blocked.
Questions
Are stablecoins safe?+
They are not risk-free. Risk depends on reserves, the issuer and redemption rights. Stablecoins are not bank deposits and usually have no deposit insurance.
Do stablecoins pay interest?+
Payment stablecoins generally do not pay holders; the issuer keeps the reserve income. Yield-bearing stablecoins pass some income on, with different risks.
What does it mean when a stablecoin depegs?+
Its market price moves away from the target, for example below one dollar. Small, brief depegs are common; large ones signal doubts about reserves or redemption.
Which stablecoins are allowed in the EU?+
Under MiCA, dollar or euro stablecoins offered to the public must come from an authorized issuer. Our answer page lists MiCA-compliant stablecoins.
- Largest dollar stablecoins →
- MiCA-compliant stablecoins →
- USDC vs USDT →
- Tokenized deposits vs stablecoins →
- Yield-bearing stablecoins explained →
This guide explains how these products work and is not investment advice or an offer of any security. Who may buy a product is set by its issuer; check the offering documents before investing.