What Are Stablecoins?

While volatility in an asset can be a compelling characteristic in certain situations (such as when trying to generate yield), it is not a helpful property when trying to account for an item's value or when the asset is used as a medium of exchange. Unlike a number of digital assets that are subject to significant price fluctuations, stablecoins - as the name suggests - provide price-stability. Stablecoins have generally become defined as digital assets backed by a relatively low volatility asset.

Price-stability is typically achieved by backing the stablecoin with reserve assets, either in the form of fiat currency or a commodity. For example, USD Coin (USDC) is backed 1:1 by U.S. dollar reserves held in U.S. financial institutions.

USDT was the firs stable coin that Algorand supported. USDC was added on September 2021. The highest number of transactions happened on November 2021 with about 1.2 M transaction. STBL launch on December 2021 and number of its transactions increased from 62 K in December 2021 to 237 K in May 2022. From August 2021(except Dec), USDC was the most popular stable coin on Algorand based on number of transactions. On May 2022, USDT and STBL's number of transactions got very close to each other and they compete hardly.

USDT was most popular for unique wallets in most of the months. USDC was in the second rank and STBL had a very little share based on unique wallets.

Volume of transactions was less than 1.3 B for stable coins on Algorand BUT by launching STBL on Dec 2021, it reached more than 1 T volume of transaction in the first month of the launch, but in the next months USDC was the most popular stable coin based on volume of transaction.

In the below charts you can see how stable coins acted in the days that UST lost its peg and market was crashed: