A stablecoin is a type of cryptocurrency that is designed to maintain a stable value relative to some external reference. This can be a currency like the US dollar, a commodity like gold, or a cryptocurrency with a relatively stable value. The goal of a stablecoin is to provide the benefits of a cryptocurrency (such as fast, cheap transactions and decentralized governance) while avoiding the volatility that is typical of cryptocurrencies like Bitcoin and Ethereum.

Stablecoins are often used as a store of value or as a medium of exchange. For example, if you want to send money to someone in another country, you might use a stablecoin to avoid the high fees and slow transaction times that can be associated with traditional money transfers. Stablecoins can also be used as a hedge against inflation in countries with unstable currencies.

There are several different types of stablecoins, including those that are backed by physical assets, those that are pegged to the value of a specific currency or commodity, and those that are algorithmically managed. The specific features and risks of different stablecoins can vary widely, so it is important to carefully research any stablecoin before using it.