Stablecoin refers to the digital assets built on blockchain that maintains a price peg to a designated price, oftentimes to $1. This allows holders to stay away from the occasional market swings while offering stability and security.
Since stablecoins act as a bridge between digital assets and fiat currency, oftentimes they are connected to custodians such as banks. Decentralized stablecoins on the other hand offer complete transparency, non-custodial with almost negligible third-party involvement.
All collateral backing the decentralized stablecoin is readily available on the public ledger. This allows stablecoins to be more trustworthy, with a single entity in control of the funds. Decentralized stablecoins can be either crypto-collateralized or algorithmic.
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