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Crypto
Algorithmic Stablecoin
A stablecoin that tries to keep its price steady (usually $1) by using computer code and incentives instead of being backed by real dollars.
These are more experimental than dollar-backed stablecoins like USDT or USDC. They can be very efficient but carry higher risk if the algorithm breaks.It's like a self-balancing seesaw that automatically adds or removes weight to stay perfectly level no matter who's jumping on it.
Real world: Terra's old UST tried to stay at $1 by automatically minting and burning tokens based on demand, but it famously collapsed in 2022.
💡 Algorithmic stablecoins sound cool but can fail spectacularly — stick to well-tested, fully backed ones unless you're okay with big risk.