JalalOnChain

Stablecoins aren't all backed the same way

Fiat-collateralized stablecoins (like USDC, USDT) hold reserves off-chain in cash and short-term securities; crypto-collateralized ones (like DAI) are over-collateralized by on-chain assets to absorb price swings; algorithmic designs try to hold a peg through incentives alone with no hard collateral — the last category has the worst historical track record for depegging under stress.

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