A “stable coin” is a type of cryptocurrency that has its value linked to another asset class outside the crypto space, such as a Fiat currency or gold, to stabilize its price. Stable coins have the purpose of combating price fluctuations by tying the value of cryptocurrencies to other (more stable) assets – Fiat currencies are usually preferred.

Stablecoins can come in many forms, here are some examples:

- Fiat: This is the most commonly used collateral for stablecoins. The U.S. dollar is the most popular among Fiat currencies, but it is not the only one.

- Precious metals: Some cryptocurrencies have their value linked to precious metals such as gold or silver.

- Cryptocurrencies: Some stable coins (very seldom) will even use other cryptocurrencies as collateral.