Stablecoins are cryptocurrencies that have their values tied to a traditional currency, like the dollar, euro, or an asset, like gold. They were created to provide stability to investors, as their value is not as volatile as traditional cryptocurrencies, like Bitcoin or Ethereum.The main types of stablecoins are:

Traditional currency-backed stablecoins

These stablecoins are 1:1 backed by traditional currencies, like the dollar, through reserves in traditional assets, such as U.S. government bonds, bank deposits, and precious metals. Examples include USDC, USDT, TUSD, and BRZ.

Cryptocurrency-backed stablecoins

These stablecoins are backed 1:1 by other cryptocurrencies, like Ethereum or Bitcoin. They have automatic mechanisms to manage these reserves, always ensuring that the value of the reserves is greater than the circulation of the stablecoins. Examples include DAI, MAI, and jBRL.

Commodity-backed stablecoins

These stablecoins are backed by assets, like gold or oil, or other cryptocurrencies. Examples include PAXG, DGLD, and WBTC.

Algorithmic stablecoins

These stablecoins use algorithms to maintain their stable value, without the need for physical backing.