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What is Crypto-Backed Stablecoin?

Crypto Terms Glossary: What is Crypto-Backed Stablecoin?

Crypto-backed stablecoins are one of four main stablecoin types. They are typically overcollateralized by an underlying cryptocurrency asset to account for crypto price volatility. With cryptocurrency as their underlying collateral, crypto-backed stablecoins are issued on-chain. To obtain a crypto-backed stablecoin, a user locks their cryptocurrency in a smart contract to receive stablecoins. Paying the stablecoins back into the same smart contract allows a user to withdraw their original collateral.

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