2025-08-30
In the field of decentralized finance (DeFi), the price of cryptocurrencies such as Bitcoin and Ethereum fluctuates violently, which brings great risks to trading, lending, investment and other activities. As a "stabilizer" in the DeFi ecosystem, stablecoins provide users with a reliable store of value and a medium of exchange due to their relatively stable price. So, what exactly are stablecoins in DeFi? How do they maintain price stability? And what role do they play in the DeFi ecosystem?
A stablecoin is a special cryptocurrency that aims to keep prices relatively stable by being anchored with external assets such as fiat currencies, commodities or other cryptocurrencies. Unlike other cryptocurrencies, the core goal of stablecoins is not price appreciation, but to act as a scale of value and a medium of exchange to solve the problem of excessive price fluctuations in the cryptocurrency market. In the DeFi ecosystem, stablecoins act as a bridge connecting cryptocurrency with real-world asset values, allowing users to avoid price volatility risks in decentralized financial activities, achieve safe storage and efficient circulation of assets. For example, users can exchange volatile cryptocurrencies for stablecoins and hold them when market conditions are uncertain to avoid asset shrinkage.
According to the different anchoring methods, stablecoins in DeFi are mainly divided into three categories: fiat currency collateral type, cryptocurrency collateral type and algorithm type. Fiat currency stablecoins, such as USDT and USDC, ensure that each stablecoin is supported by real fiat currency assets by depositing 1:1 fiat currencies such as US dollars into bank accounts and publishing corresponding amounts of stablecoins with deposits as endorsements; cryptocurrency stablecoins, such as DAI, users need to over-mortgage bitcoin, Ethereum and other cryptocurrencies, smart contracts generate stablecoins according to the value of the collateral and the set mortgage rate. When the value of the collateral falls, the system will trigger a liquidation mechanism to maintain the stability of the stablecoin price; algorithmic stablecoins rely on smart contracts and algorithms to control the price by adjusting the supply of stablecoins. When the price is higher than the anchor target, increase the supply, and vice versa reduce the supply. HashKey Exchange also supports a variety of stablecoin trading pairs when providing digital asset trading services, helping users to manage assets flexibly in different market environments.
Stablecoins have a wide range of indispensable applications in the DeFi ecosystem. In decentralized exchanges (DEX), stablecoins serve as the base currency for trading pairs, providing users with a stable medium of exchange and reducing transaction risks; in lending agreements, users can mortgage cryptocurrency to borrow stablecoins to meet their capital needs while avoiding the collateral being liquidated due to market fluctuations; in liquidity mining, stablecoins are an important asset choice for liquidity providers. Users can obtain fees and token rewards by injecting stablecoins into liquidity pools. In addition, stablecoins are also used for payment, cross-border transfer and other scenarios to improve transaction efficiency and convenience. HashKey Exchange actively explores more application scenarios of stablecoins in the DeFi ecosystem, and provides better support for customer engagement DeFi activities by optimizing transaction services and product design. However, when using stablecoins, users also need to pay attention to the risks of different types of stablecoins, such as the regulatory risk of fiat-backed stablecoins and the mechanism failure risk of algorithmic stablecoins.
What is HashKey Exchange?
HashKey Exchange is one of the first regulated cryptocurrency exchanges in Hong Kong to obtain a license from the Securities and Futures Commission (SFC). It supports fiat currency deposits and trading in Hong Kong dollars (HKD) and US dollars (USD), offering users spot trading services for mainstream digital assets including Bitcoin (BTC), Ethereum (ETH), and Tether (USDT). The platform also provides OTC (over-the-counter) services to meet the needs of large-value asset transactions and fiat currency conversion, ensuring more flexible and private trading. To cater to the asset allocation needs of different investors, HashKey has launched the HashKey Earn channel, offering users fixed-term and demand financial products to achieve stable appreciation of crypto assets. The platform holds ISO 27001 and 27701 security certifications, employs a 98% cold wallet storage mechanism, and incorporates security measures such as two-factor authentication to provide users with a stable and reliable trading environment.
Download link: https://www.hashkey.com/en-US/download
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