What is a Stablecoin?

A stablecoin is a type of cryptocurrency that is derived from an underlying asset with a relatively constant value, usually a fiat currency such as the US dollar. Stablecoins are important because they are a critical component for stability within a blockchain ecosystem. With stablecoins, users can hold an asset of stable value on-chain, which is beneficial for on-ramping to cryptocurrency, and not having to transfer off-chain every time users want sell a riskier digital asset.