What a stablecoin is
A stablecoin is a cryptocurrency designed not to swing: each token is worth (or tries to be worth) one dollar. Unlike bitcoin, whose price moves all day, a stablecoin's goal is to be boring.
The best known are USDC, issued by Circle, and USDT, issued by Tether. Both exist on many blockchains, Solana among them.
How it holds its value
The most used dollar stablecoins are backed by reserves: for every token in circulation, the issuer states it holds a dollar or very liquid short-term assets. When someone wants out, they hand the token back to the issuer and receive dollars.
That is why trust in the issuer and its reserves is what holds the price up. Issuers publish periodic reports of what they hold; they are worth reading.
What they are for
- Holding digital dollars without opening a dollar account.
- Sending money anywhere in seconds and at very low fees on networks like Solana.
- Buying other assets on-chain: tokenized stocks, tokenized gold or bitcoin, without going through a bank.
- Earning interest in lending protocols, with risks that never go away.
Risks you should not ignore
A stablecoin can lose its peg to the dollar: USDC did for a few days in March 2023, when part of its reserves was stuck in a bank that failed. It is also not a bank deposit nor insured by a government, and it depends on the network it moves on.
The practical rule: do not put into a single stablecoin more than you can afford to watch drift for a few days.
How they are used in INVERSHA
In INVERSHA you open a portfolio in USDC or USDT on Solana. The engine reads the news and buys with the share you assign to it; in the case of USDC, what it does not invest can earn interest. To choose a currency, read USDC vs USDT.
General information, not investment advice. Investing carries risk, including losing the money you put in.