Insights · Payments
Types of Stablecoins Explained
Not all stablecoins are built the same. Here is how they differ.
A stablecoin holds a stable value, usually pegged to a fiat currency. But the mechanism that maintains that peg varies — and the mechanism determines the risk.
The main types
- Fiat-backed — each token is backed by reserves of fiat or equivalents held by an issuer. Simple and widely used; depends on the issuer's transparency.
- Crypto-collateralised — backed by other crypto assets, over-collateralised to absorb volatility. More decentralised; capital-inefficient.
- Algorithmic — maintain the peg through supply rules rather than full backing. Historically the most fragile.
Why the difference matters
For payments and settlement, backing quality and transparency are everything — a stablecoin is only as reliable as the mechanism behind its peg.
Stablecoins and Syrax
The Syrax payment gateway supports digital-asset settlement with compliance built in. See also stablecoins in cross-border payments.
Learn more: read stablecoins in cross-border payments, or browse the glossary.
This article is for informational purposes only and does not constitute financial, legal, or investment advice.