Stablecoin

Several other companies have recently introduced so-called stablecoins, linked to the value of the dollar. JPMorgan Chase even said it was experimenting with the concept last month.

The first attempt to scale a stablecoin came from Maker. At the time of writing, there are about half a billion dollars worth of cryptocurrency tied up as collateral for this stablecoin—the Dai—whose value is pegged to the US dollar.

So investors buy stablecoins not to make a profit but instead as a place to store money within the cryptocurrency infrastructure and to use when buying and selling other crypto assets. […] The first stablecoin was created in 2014 to help facilitate transactions in the crypto system because at the time, banks were reluctant to give accounts to crypto companies, McKeon said.

But the meltdown gathered momentum this week when TerraUSD, a stablecoin, imploded. Stablecoins, which are meant to be a more reliable means of exchange, are typically pegged to a stable asset such as the U.S. dollar and are intended not to fluctuate in value.

Until six months ago, stablecoins were a niche pursuit, used mostly in crypto trading and criminal activity.