Stable coins are crypto currencies that linked their value to real world assets like fiat currency and gold etc. This ensures that prices of stable coins can not fluctuate significantly. Due to low fluctuations in prices these stable coins is used in trading the other crypto currencies like Bitcoin and ether and many more, Staking on crypto exchanges, savings and cross border payments.
Examples of stable coins are as follows.
- Tether USD (USDT)
- Tether Gold (XAUT)
- Algorithmic Stablecoins
1. Tether USD (USDT)
Tether USD is a stable coin and its price is linked to US Dollar. One US dollar will be kept in bank account for issuing 1 usdt. This will make it less volatile crypto currency. The total market cap of tether crypto is 158363 million US dollar in may 2025. The value of tether usd is based on the entity maintaining reserves in US dollar which will incur costs for it.
2. Tether Gold (XAUT)
This is new financial investment innovation where real gold value is linked to tether gold. It helps user to trade and own gold without having a lot of capital as the tether gold can be traded in fractions. Due to tokenization, everyone can easily own it, the digital gold invention in early stages so few people know it and people are not familiar with it how this works.
3. Algorithmic Stable Coins
These coins maintain their price with respect to other crypto currencies backed by it. However, the implementation of such stable coins is difficult as compare to fiat assets due to complex nature of smart contract code. The major drawback of algorithmic blockchain is they need to maintain sufficient reserves to maintain the stablecoin prices. Such coins include DAI Stablecoin, MKR, Frax Finance Coin
