Stablecoin

What it refers to

A stablecoin is a token designed to hold a steady value against a reference asset, most often one US dollar. Common designs back each token with reserves of cash and cash equivalents held by an issuer, or with crypto assets locked as collateral in smart contracts.

"Designed to" matters: a stablecoin's market price can move away from its target, for example under market stress or when confidence in its backing falls.

Why this concept exists

Most crypto assets move in price, which makes them awkward for payments, pricing, savings and accounting. A stablecoin gives on-chain finance a unit whose value people can plan around, and it is widely used to price trades, settle payments, supply to lending markets and post as collateral.

Many stablecoins exist on several blockchain networks at once, so people often need the same stablecoin on a different network from the one where they hold it.

What this changes for system design

A system that coordinates financial actions across networks needs a steady unit to keep its accounts in, and it has to reach stablecoins on the networks where people hold them.

On SODAX, stablecoins are one of three asset categories available through the SODAX API, alongside crypto assets and tokenized assets (RWAs). They enter SODAX through asset whitelisting like any other asset and keep their canonical name on every network where SODAX whitelists them. Inside SODAX, bnUSD is the stablecoin used as a unified accounting and settlement asset, which simplifies liquidity coordination across networks.

Related terms

• bnUSD stablecoin: the settlement and accounting asset inside SODAX
• Tokenized assets (RWAs): another of the three asset categories
• Asset whitelisting: how a stablecoin enters SODAX
• Settlement: where a steady unit matters most
• Cross-network transfer: moving a stablecoin to another network
• Modern money: money across many networks