Stablecoins are cryptocurrencies designed to maintain a relatively stable value, usually by being pegged to a traditional currency such as the US dollar. Unlike Bitcoin or Ethereum, which can experience large price swings, stablecoins are designed to stay close to a fixed value.

The most widely used stablecoins are USDT (Tether) and USDC (USD Coin), both of which aim to maintain a value of around $1. In simple terms, a stablecoin can be thought of as digital dollars that operate on a blockchain.

Cryptocurrencies such as Bitcoin and Ethereum are highly volatile. This makes them useful as investment or trading assets, but less convenient as a stable unit of account. Imagine a trader sells $50,000 worth of Bitcoin. The trader may want to…