How does USDT stablecoin maintain its price stability?

1 answers

• McCarthy EhlersAug 25, 2024 · a year ago
  USDT stablecoin, like other stablecoins, maintains its price stability by being pegged to a specific fiat currency, in this case, the US dollar. This means that for every USDT token in circulation, there is an equivalent amount of US dollars held in reserve. This backing provides confidence to users that USDT can be redeemed for its underlying value, ensuring price stability. Furthermore, USDT is actively traded on various cryptocurrency exchanges, which helps to maintain its price stability. Traders can buy or sell USDT based on market demand, which helps to balance the supply and demand of USDT and keep its price stable. Overall, the combination of fiat currency backing and active trading activity helps USDT maintain its price stability.
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