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Stablecoins are digital currencies pegged to a stable asset class. The value of a stablecoin is derived from the value of the underlying asset. In case of USD-backed stablecoins, it means a token is pegged directly to the US Dollar. This is what makes it so useful in the highly volatile crypto market, as traditional cryptocurrencies such as Bitcoin, Ethereum, and Ripple have regular and often wild price swings. Some of the world’s top stablecoins are unable to prove that they have sufficient asset backing or cash reserve, and this leads to potential risks for users.