Stablecoins in Crypto Finance | 10% for @tron-fan-club

Most emerging sector of crypto based project is decentralized finance (DeFi). It has been one of the fastest-growing areas of the crypto industry in recent days. It is an attempt of creating decentralized financial instruments and applications using blockchain technology to eliminate the traditional financial intermediaries.

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Stablecoins are key components of decentralized finance. Stablecoins are digital assets that are designed to maintain a stable value. Main concept is to stabilize the price of the coin by backing it with any asset like gold, dollar etc. It is normally pegged to a fiat currency such as the US dollar. Stablecoins are seen as a key building block for DeFi. These are used to create financial instruments like loans, insurance and trading derivatives in decentralized finance. These stable coins are more accessible and transparent than traditional financial products.

Based on stablecoin’s unique features and design there are a number of different types of stablecoins. Some stablecoins are backed by physical assets such as gold, platinum or other precious metals but many others are backed by fiat currencies like USD held in reserve. Most of the stablecoins are algorithmically controlled. Here supply and demand being managed by smart contracts. Stablecoins offer a stable store of value that can be used for transactions and investments. This stability can be particularly valuable in the context of the volatile crypto market. Many digital assets can fluctuate rapidly. By providing a stable value stablecoins can help to reduce the risk of losses due to market volatility. This is the beauty of this nice coin. Stablecoins are often used as collateral for loans. So the need of traditional financial institution is eliminated. This approach can offer greater flexibility and accessibility for borrowers. It is the assurance of greater transparency and security for lenders.