Stablecoin section / ecosystem map
Three ways stablecoins try to hold one price.
A simple map of what sits behind each model: real-world reserves, crypto collateral, or rules that push supply up and down.
01 / Fiat-backed
Cash-like reserves
A company issues tokens after money is held with a bank or reserve partner.
Advantages
- Easy to explain to non-specialists.
- Usually has the most direct price anchor.
Disadvantages
- Requires trust in issuer and reserve reporting.
- Can depend on banks and regulators.
02 / Crypto-backed
Collateral on-chain
Crypto assets are locked in software so a stablecoin can be borrowed against them.
Advantages
- Transparent rules and balances on-chain.
- Less dependent on one bank account.
Disadvantages
- Collateral value can move quickly.
- Harder to explain than fiat reserves.
03 / Algorithmic
Rules manage supply
Instead of reserves, the system tries to defend price by changing how many tokens exist.
Advantages
- Ambitious design with less reserve capital.
- Can be highly automated in theory.
Disadvantages
- Confidence can break during stress.
- Often the hardest model to sustain.