💡 Some stablecoins are solid. Others? Total disasters waiting to happen.
Here are the 4 types of stablecoins you need to know:
1️⃣ Fiat-backed: Backed by real dollars in a bank. Think USDC or Tether (USDT). Easy to understand, relatively stable.
2️⃣ Commodity-backed: Backed by assets like gold (e.g., PAX Gold). Value comes from real-world stuff in vaults.
3️⃣ Crypto-backed: Backed by other cryptos like Ethereum (e.g., DAI). It can work, but feels like balancing on a trampoline.
4️⃣ Algorithmic: Backed by math, not real assets. Just code trying to hold $1 value. TerraUSD tried, and lost $40 billion in 2022.
If you’re exploring stablecoins, start by understanding these types. And stick with the safer ones.
