What it means
The cash and short term assets a stablecoin issuer holds to back every token in circulation.
Circle's reserves are mostly cash in banks and short term government bonds, and an accounting firm reports on them every month.
How it works
The quality of the reserves is the first thing to check about any stablecoin.
Related terms
| Term | What it means |
|---|---|
| Redemption | Handing stablecoins back to the issuer in exchange for the same amount of ordinary money. |
| Stablecoin | A token on a blockchain designed to keep a steady value, usually one dollar or one euro, backed by reserves. |
| Depeg | When a stablecoin's price drifts away from the currency it tracks, for example a digital dollar trading at 0.97 dollars. |
This glossary explains terms in general. It isn't investment, tax or legal advice.