Different mechanisms
Fiat reserves, crypto collateral and algorithmic designs have different risks.
FinFly Explains / Crypto
What a stablecoin promises—and does not
A stablecoin aims to track a reference value. That does not mean every token can always be exchanged without loss.
Trading versus redemption
Selling on an exchange differs from redeeming with an issuer. Direct Circle Mint transactions, for example, depend on eligibility for that service.
Check the terms
Review issuer, reserves, redemption rules and address restrictions. Check the network and custody platform too; a familiar ticker is not contract verification.
Yield is separate
Interest offered for depositing a stablecoin is a separate product with separate risk. A price peg does not generate yield automatically.
Method
Primary sources
The explainer is checked against these institutional and industry sources. Links open the original material.