Stablecoins: USDC, USDT, DAI
Cryptocurrencies pegged to $1 USD
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0 / 5 completed💵 The $1 Crypto Problem
Bitcoin's price swings 5-10% daily—terrible for payments or savings. Stablecoins solve this by pegging to $1 USD, combining crypto's speed with fiat's stability. USDT and USDC hold $122B in reserves, DAI locks $5B in crypto collateral, while algorithmic coins like UST failed catastrophically. Today, stablecoins process $7+ trillion annually—more than Visa—powering DeFi, cross-border payments, and crypto trading with minimal volatility.
⚖️ The Peg Mechanism
Maintaining $1.00 requires constant balancing. Fiat-backed stablecoins (USDC, USDT) hold real dollars—redeem 1 token for $1 cash. Crypto-backed (DAI) over-collateralize—lock $150 ETH to mint $100 DAI. Algorithmic coins (failed UST) used supply/demand with no reserves—when panic hit, the death spiral began. The peg is everything: lose it, and billions vanish instantly.
Total Market Cap
Combined stablecoin supply
Annual Volume
More than Visa's $12T
Peg Models
Fiat, crypto, algorithmic
Peg Range
Typically $0.99-$1.01
🎯 Why Stablecoins Matter
DeFi Foundation
85% of DeFi uses stablecoins for lending, liquidity pools, and yield farming
Trading Pairs
BTC/USDT is world's largest trading pair—$50B+ daily volume
Cross-Border Payments
Send $10K globally in minutes for $2—banks charge $50+ and take days
Dollar Access
People in Argentina, Turkey, Lebanon escape inflation by holding USDC/USDT
⚠️ The UST Collapse (May 2022)
TerraUSD (UST) was an algorithmic stablecoin backed by LUNA token, not reserves. When UST dropped to $0.98, panic triggered mass redemptions. The algorithm minted LUNA to defend the peg, hyperinflating supply from 350M to 6.9 trillion tokens. LUNA crashed 99.99%, UST collapsed to $0.10, destroying $60B in 72 hours.
Lesson: Algorithmic stablecoins without reserves are death spirals waiting to happen.