Web3 Academy — Learn Blockchain, Solidity & DeFi

Stablecoins maintain a peg to a reference asset (usually USD). Three main types: Fiat-backed (USDC, USDT) — each token is backed by $1 held in reserve. Crypto-collateralized (DAI) — overcollateralized with crypto assets, governed by MakerDAO. Algorithmic (FRAX) — use algorithms and incentive mechanisms to maintain the peg. Stablecoins are the backbone of DeFi, providing a stable unit of account for lending, trading, and yield farming. Understanding their mechanisms and risks is essential.

💡 Key Takeaway

This lesson covers the fundamental concepts. Make sure you understand these before moving to the next chapter.

Stablecoins & Their Mechanisms