Trust & Public Image

The success of a stablecoin is often dependent on the public interest and adoption in the long run. If the marketing or brand image of a stablecoin deteriorates, so does the stablecoin in the long run. 

The stablecoin risks above highlight the importance of understanding stablecoins before you think about investing in them.

What are stablecoins used for?

Since the launch of Bitcoin in January 2009, the space of cryptocurrencies went from skepticism to mainstream adoption. A similar case is being seen in the case of stablecoins as more and more institutions launch their native stablecoin, and at the same time, investors are showing interest in them as well. 

Stablecoins serve as an ideal base currency that you can use to buy, sell, transfer, and receive payments on the blockchain. A good example of this is Tether (USDT) which is widely popular among crypto users to trade on centralized and decentralized exchanges.
Companies are also using stablecoins to pay salaries, while large organizations are using them as collateral to borrow other crypto assets, a great example of which is decentralized finance (DeFi). The whole concept of DeFi means that companies provide a stable asset, i.e. stablecoin, to users on which they can earn interest over time. In return, users stake their crypto/fiat assets on the company’s platform.