A stablecoin maintaining its peg through algorithmic mechanisms (minting/burning, rebasing) rather than fiat reserves. Higher capital efficiency but riskier — Terra's UST collapse demonstrated catastrophic depeg potential.
A stablecoin maintaining its peg through algorithmic mechanisms (minting/burning, rebasing) rather than fiat reserves.
Higher capital efficiency but riskier — Terra's UST collapse demonstrated catastrophic depeg potential.
This is a key building block of decentralized finance. Understanding it helps you navigate DeFi protocols safely, evaluate yield opportunities, and avoid common pitfalls.