A stablecoin is a blockchain-based digital asset that is intended to keep a price peg at a specific price, often $1. They need to have some backup in fiat money, cryptocurrencies, or on-chain tokens that it may be exchanged for in order to remain useful and legitimate as a payment method. This support is referred to as collateral. A stablecoin that is wholly or almost entirely backed by collateral kept in a reserve is referred to as being “collateralized.” The completely collateralized stablecoins USDT, USDC, and DAI are notable examples. Holders of the token have the option to exchange their tokens for cash or other assets that may be utilized in the real world thanks to the collateral.