Fiat-Backed Stablecoin
A fiat-backed stablecoin (USDC, USDT) promises 1 token = $1 held in reserve — cash, T-bills, and equivalents at banks and custodians, attested periodically
A fiat-backed stablecoin (USDC, USDT) promises 1 token = $1 held in reserve — cash, T-bills, and equivalents at banks and custodians, attested periodically. Redeem with the issuer (after KYC) and burn the token; anyone can mint by depositing dollars.
Why it matters
They’re the safest stable design in practice and the most centralized in principle: issuers can freeze any address, block whole countries, and must be trusted about reserves (Tether’s history of vague attestations is the cautionary tale). A fiat stablecoin is a bank deposit with blockchain rails — audited trust, not trustlessness. Diversify issuers accordingly.
Related terms
stablecoin ·
depeg · KYC