STABLECOINS: USDC, USDT, DAI
Plain English
Stablecoins are crypto assets pegged to $1. They're how traders move value around the crypto economy without exposure to BTC/ETH volatility. The big three — USDC, USDT, DAI — work very differently under the hood.
Going deeper
USDC (Circle) and USDT (Tether) are fiat-backed stablecoins, claiming 1:1 USD reserves audited (USDC monthly, USDT quarterly). DAI is decentralized, over-collateralized by ETH and other crypto in the MakerDAO protocol. Each carries different risks: USDC depegged briefly to $0.87 during the SVB collapse in March 2023; USDT has faced years of reserve-quality questions; DAI depends on the solvency of its collateral basket. Trillions in trading volume routes through stablecoins annually — they are the liquidity layer of crypto markets.
Examples
Why traders hold USDC
After taking profits on a BTC trade, you don't want to send USD back to your bank (slow, fees). Convert to USDC instead. You stay on-chain, ready to redeploy in seconds.
The depeg risk
USDC briefly traded at $0.87 when Circle disclosed $3.3B of reserves were at the failed Silicon Valley Bank. Fast-acting traders bought at $0.90 and sold the bounce back to $0.99 within 48 hours.