Research Study
Stablecoins Explained:
Part One
Breaking down the basics of stablecoins
January 27, 2026 • 25 min read
Executive Summary
The very first stablecoins were issued in 2014 as means to bridge the gap between legacy finance systems and the digital economy. In the years since, adoption of the digital asset class has only continued to grow. Today, stablecoins are being used as a near-term store of value, a medium for day-to-day transactions, a hedge against volatility, and a currency for DeFi-based transactions.
Fidelity Digital Assets’ three-part series, “Stablecoins Explained,” provides readers with a foundational education, each part building on the last to offer valuable insights for both beginners and more seasoned users. The first part in our series breaks down the basics, explaining how the asset’s value is pegged to traditional currencies and exploring other key concepts including:
- An overview of the most popular variations, including fiat-collateralized, crypto-collateralized, algorithmic, and commodity-backed
- How stablecoins address gaps associated with both traditional systems and other digital assets
- Potential benefits including reduced costs and seamless cross-border transactions
- Notable concerns such as counterparty risk and challenges associated with third-party auditing and attestations
Download the first installment of our stablecoin series now to begin learning about this increasingly popular digital asset.
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