What are stablecoins and what do they do?

Stablecoins are a type of cryptocurrency that are designed to maintain a stable value, despite market fluctuations. They are called "stable" because their value is pegged to a stable asset, such as the US dollar.

The idea behind stablecoins is to provide a cryptocurrency that has the benefits of digital assets (such as fast and cheap transfers) while avoiding the volatility that is often associated with cryptocurrencies like Bitcoin or Ethereum. This makes stablecoins a useful tool for individuals who want to store or transfer value without worrying about price fluctuations.

For example, let's say you want to store some money in a digital form, but you're concerned about the value of the money changing rapidly. You could convert your money into a stablecoin that is pegged to the US dollar. This way, the value of your holdings would remain relatively stable, even if the value of other cryptocurrencies were to fluctuate.

Overall, stablecoins are an important tool in the DeFi ecosystem and are used in a variety of applications, including lending and borrowing platforms, decentralized exchanges, and more.

At ZaynFi we focus on stablecoin staking or Liquidity Mining to provide a way where users can protect their capital (in USD terms) while generating yields that surpass the interest rates given by banks via their savings accounts. Also, for users living in countries with massive local currency volatility, holding stablecoins may help protect their wealth.

Last updated