An algorithmic stablecoin is intended to ensure price stability as well as balance an asset's circulating supply by being tied to a reserve asset such as the US dollar, gold, or any foreign currency.
In other words, an algorithmic stablecoin employs an algorithm that can issue more coins when the price rises and purchase them off the market when the price falls. These currencies provide traders with the security of obtaining many benefits of crypto assets like ETH and BTC without the danger of excessive price volatility.
An algorithmic stablecoin is a reflection of full decentralization, since there are no regulatory authorities to manage or monitor the processes, as the code is responsible for both supply and demand, as well as the goal price. These fundamental advantages provide a scalable solution that no other set on the market currently provides, and the absence of the tangible asset needed behind algorithmic stablecoin reduces the risk of user mistakes.
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