Crypto mechanics
The idea
A stablecoin aims to track a reference value through a specific mechanism. The label does not guarantee redemption, liquidity or constant market price. Reserve quality, redemption access, counterparties and contract design vary. A market price near one dollar does not prove every holder can redeem one dollar on demand.
A worked example
A token quoted at USD 1.00 can trade below that value if confidence or liquidity deteriorates. The exit price is the executable market price.
Try it yourself
Identify the stated backing mechanism and who can redeem in a hypothetical stablecoin design.
A mistake to avoid
Treating a stablecoin balance as equivalent to an insured bank deposit.