Stablecoin Glossary
Algorithmic Stablecoin
An algorithmic stablecoin maintains price stability through automated supply adjustments rather than reserve backing.
Explanation
These systems attempt to maintain a peg by expanding or contracting token supply based on market conditions. Some designs involve secondary tokens to absorb volatility.
Why it matters
Algorithmic stablecoins illustrate experimental approaches to decentralized monetary systems.
Example
TerraUSD was an algorithmic stablecoin.
Related terms