Stablecoin Terms and Definitions

Understanding stablecoins is easier than you think. Simplify the education process with Blockfer's essential stablecoin terms and their definitions below.

AML

AML - ‘Anti Money Laundering’. A formation of laws created by regulators in order to prevent illegally sourced funds from being claimed as legitimate income.

Centralized Stablecoin

A stablecoin created and maintained by a third party company. While usually regulated and insured, users still must trust the stablecoin issuer to operate honestly.

Circulating Supply

The total number of accessible, liquid units issued for a specific stablecoin.

Collateral

The asset used to secure and back the value of the stablecoin.

Decentralized Stablecoin

A stablecoin that is governed and maintained by smart contracts. Users do not need to trust a third party company when using decentralized stablecoins.

Ethereum

The public, open-source, blockchain based distributing computing platform that supports the majority of stablecoins with smart contracts.

ERC-20

An Ethereum protocol standard used for smart contracts that enables tokens to be issued. Most stablecoins are ERC-20s using the Ethereum blockchain.

KYC

"Know Your Customer" - Financially regulated companies, including centralized stablecoin issuers, are required by law to verify the identity of their customers.

Pegged To

Fixed exchange rate. Stablecoins were designed to maintain a 1:1 peg to their underlying asset.

Redemption Fees

Commission fees charged to customers when they redeem their stablecoins for fiat through an issuance platform.

Stablecoin Cold Storage Wallet

A physical hardware wallet device used for storing and accessing stablecoins.

Stablecoin Market Cap

The combined dollar value of all issued stablecoin units for a specific stablecoin.

Stablecoin Volume

The exchange traded volume of a stablecoin within a period of measured time, usually 24 hours.

Stablecoin White Paper

A document outlining a company’s funding requirements, business model, and product roadmap.

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