These stablecoins are linked to things like fiat currencies, commodity, or even other cryptocurrencies. The most common is the US dollar and they maintain a price similarity via collateralization or through algorithmic mechanisms, buying and selling the asset.

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- Asset-linked stablecoins
- Algorithm-based stablecoins

Types of Stablecoins

Stablecoins: risks, potential and regulation

These are stablecoins in which the network they run on has an algorithm that is constantly adapting supply to demand. It has the ability to burn or create more of that cryptocurrency in response to the demand of users, thus keeping the price stable. One of the more popular examples is the stablecoin DAI, issued by MakerDAO. 

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