Definition
A stablecoin is a cryptoasset designed to maintain a value relative to a referenced currency, asset, or basket through a stated stabilization mechanism.
In market context
Designs may rely on reserves, overcollateralization, algorithms, market incentives, or combinations of these approaches. Price stability depends on reserve quality, redemption rights, governance, liquidity, custody, and confidence, so a token can trade away from its reference value. The term stable describes an objective rather than a guarantee, and legal protections may differ significantly from those attached to a bank deposit.
Risk context
A stablecoin can depeg, suspend redemption, or become illiquid, causing losses even without broad crypto-market movement.
Source
Use the primary source for fuller regulatory or market context.