A stablecoin is a type of cryptocurrency that maintains a stable value relative to a traditional currency, commodity, or index. This is achieved through either collateralization or algorithmic mechanisms.
Stablecoins reduce the volatility and uncertainty associated with traditional cryptocurrencies, and provide a more stable medium of exchange for everyday transactions.
They are widely used in the crypto space for trading, lending, and other financial applications. However, stablecoins also face regulatory challenges, and their stability mechanisms can sometimes fail, leading to price fluctuations.