What is a stablecoin quiz

Question 1

How does a fiat backed stablecoin like USDC keep its price near one dollar?

Accepted Answer

The issuer holds reserves and lets users redeem each token for a dollar

Question 2

What is the main feature of a crypto collateralized stablecoin such as DAI?

Accepted Answer

It is backed by more crypto collateral than the value of stablecoins issued

Question 3

What happened to TerraUSD in May 2022?

Accepted Answer

Its algorithmic peg collapsed and tens of billions in value were lost

Question 4

Why did USDC briefly fall below its peg in March 2023?

Accepted Answer

Part of its reserves were held at a bank that had just collapsed

Question 5

Which is the most useful thing a stablecoin holder can do to manage risk?

Accepted Answer

Read the issuer's reserve reports and understand the redemption terms

What is a stablecoin: the quiz