🧩 Not all stablecoins are created equal
The main question: what is the coin backed by? This determines the risk.
🏦 Fiat-backed (reserve in dollars and bonds). The most straightforward, but you're putting your trust in the company and its reports.
🔗 Crypto-backed (collateral in $ETH and other crypto, with a buffer). More transparent on-chain, but the collateral can drop during sharp moves.
🤖 Algorithmic (peg maintained by code and incentives, without full reserves). Sounds nice, but this is where some of the biggest crashes happened, losing nearly all funds.
📌 Takeaway: the less real backing, the higher the risk. Read up on how the coin works before you dive in.
Not financial advice. NFA, DYOR.
#Crypto #CryptoEducation #DeFi #Altcoins
🧭
The main question: what is the coin backed by? This determines the risk.
🏦 Fiat-backed (reserve in dollars and bonds). The most straightforward, but you're putting your trust in the company and its reports.
🔗 Crypto-backed (collateral in $ETH and other crypto, with a buffer). More transparent on-chain, but the collateral can drop during sharp moves.
🤖 Algorithmic (peg maintained by code and incentives, without full reserves). Sounds nice, but this is where some of the biggest crashes happened, losing nearly all funds.
📌 Takeaway: the less real backing, the higher the risk. Read up on how the coin works before you dive in.
Not financial advice. NFA, DYOR.
#Crypto #CryptoEducation #DeFi #Altcoins
🧭