Guide8 min read
Stablecoins Explained: USDT, USDC, DAI and More
Stablecoins are cryptocurrencies pegged to fiat currency, combining crypto benefits with price stability. They power DeFi, remittances, and everyday crypto commerce.
Types of Stablecoins
- Fiat-collateralized: USDT (Tether), USDC (Circle), backed 1:1 by reserves
- Crypto-collateralized: DAI (MakerDAO), backed by ETH and other crypto, over-collateralized
- Algorithmic: Experimental, maintain peg through supply mechanics. High risk after Terra/UST collapse
Why Use Stablecoins?
- Trading: Move between positions without fiat off-ramp
- Remittances: Send money globally with minimal fees
- DeFi: Provide liquidity, earn yield, use as collateral
- Hedging: Park value during downturns
Choosing the Right Stablecoin
USDT for maximum liquidity. USDC for regulatory transparency. DAI for decentralization. Store on a Ledger for security—exchange-held stablecoins carry counterparty risk.
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