General idea
A stablecoin aims to maintain a relatively stable reference against an external asset, often a currency such as the U.S. dollar.
Different models
Some stablecoins are backed by reserves, others use overcollateralized crypto assets, and some use algorithmic designs. Each model relies on different mechanisms.
Stability does not mean no risk
The reference can be affected by reserves, liquidity, technology, regulation or protocol design. The term stablecoin describes a stability objective, not an absolute guarantee.
Network and asset
The same stablecoin may exist on several blockchain networks. The asset and the network are separate concepts and both form part of its technical representation.