What are stablecoins?
Stablecoins are digital tokens designed to keep a stable value, usually 1:1 with a currency like the US dollar or the euro, most often backed by reserves.
Definition
A stablecoin is a token on a blockchain that tracks the value of a currency. Most stablecoins are backed by reserves, such as cash and short-term government bonds, held by an issuer that redeems tokens one to one.1 Some, such as ZCHF, are backed by crypto collateral instead.2
Unlike Bitcoin, a stablecoin is designed not to change in price. That makes it usable for payments and payouts. Its market price can still move away from its target for a time, for example when markets are under stress.1
Why businesses pay in stablecoins
- Transfers that usually complete in minutes, 24 hours a day, 7 days a week3
- Network fees that are often low and do not depend on the payee's country3
- Access to dollars or euros where local banking is slow or expensive4
- Every transfer is recorded on the blockchain4
Risks to understand
A stablecoin is only as good as its reserves and its issuer. If holders lose trust in the reserves, many can try to redeem at once and the price can fall below its target.1 Payees also need to use the right blockchain network and keep their wallet safe.
USDC
USDC is a US dollar stablecoin issued by Circle and one of the largest stablecoins by market value.1 Its reserves are held in cash, short-dated US Treasury bills and repurchase agreements, mostly through a money market fund managed by BlackRock, and Circle publishes monthly reserve reports checked by an independent accounting firm.5 It lets creators outside the US hold or receive US dollars.4
USDC runs on many blockchains, for example Ethereum, Base, Solana and Polygon.6 Sender and payee must use the same network and the correct address, or the funds can be lost.7
EURC
EURC is a euro stablecoin, also issued by Circle and backed 1:1 by euro reserves.5 It lets European creators receive euros on-chain and move them to their bank account through an off-ramp.
ZCHF (Frankencoin)
ZCHF is a stablecoin that aims to track the Swiss franc, created through the Frankencoin protocol. Instead of a single company holding bank reserves, users mint ZCHF against crypto collateral.2 If a liquidation does not cover a loss, reserves and equity in the protocol absorb it. There is no fixed promise to redeem ZCHF for Swiss francs, so its price depends on collateral, reserves and market activity.2 It gives payees who plan in Swiss francs an on-chain option.
How Talentir helps
Creators can choose stablecoin payouts, for example in USDC, EURC or ZCHF. See global payments
Further reading
Related topics
Crypto wallets
A crypto wallet holds the keys that control stablecoins. Wallets are either self-custodial or custodial.
On-ramp and off-ramp
An on-ramp converts bank money into stablecoins. An off-ramp converts stablecoins back into money in a bank account.
Payout methods
A payout method is the rail that delivers money to the payee: bank transfer, digital wallet such as PayPal or Venmo, or stablecoin.
Currency conversion (FX)
FX conversion changes money from one currency to another. The rate and the spread you get decide how much the payee receives.