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  1. Home
  2. /Glossary
  3. /Algorithmic Stablecoin
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defi

Algorithmic Stablecoin

A stablecoin that maintains its peg through algorithms and smart contracts rather than holding actual reserves.

Definition

A stablecoin that maintains its peg through algorithms and smart contracts rather than holding actual reserves. When the price drifts, the protocol automatically adjusts supply to push it back. Terra's UST collapse in 2022 showed how risky these can be when confidence breaks.

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GuideStablecoins Guide

Related Terms

Stablecoin

A cryptocurrency designed to maintain a stable value, usually pegged to the US dollar.

Smart Contract

Self-executing code stored on a blockchain that runs when conditions are met.

Peg

A fixed exchange rate between two assets.

1inch

A DEX aggregator that splits trades across multiple decentralized exchanges to find the best overall price.

Aave

One of the biggest lending and borrowing protocols in DeFi.

Across Protocol

A cross-chain bridge that uses an optimistic verification system and a network of relayers to move tokens between chains quickly.

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