Want to Buy Stablecoins? Think Carefully
Recent events – like the Terra (CRYPTO: LUNA) crash, Celsius bankruptcy filing, and crypto winter – have reminded us that cryptocurrencies are inherently volatile. This can certainly be discouraging to cryptocurrency investors, but there is one type of cryptocurrency that aims to limit this turbulence: stablecoins. Stablecoins are meant to retain constant value over time by linking their value to that of a stable asset. So what does this mean for investors? Let's take a deeper look at what a stablecoin is and whether it could be a good addition to your portfolio.
Stablecoins work in a variety of different ways, depending on their type. The four main types of stablecoins are:
The Terra blockchain was launched in April 2019 by two Korean businesspersons, Do Kwon and Daniel Shin. Terra offered several stablecoins including TerraUSD as part of a global payment platform. Terra's native crypto token LUNA was used for several purposes, including staking, governance, and as part of the supply control mechanism that kept the algorithmic stablecoins pegged to their fiat equivalents.
Source Fool.com
