What is a Fiat?
Quick Definition
Fiat refers to government-issued currency that derives its value from legal recognition and institutional trust rather than a physical commodity.
Full Definition
Fiat currencies such as the US dollar, Euro, British pound, or Swiss franc are issued and backed by governments. Their value isn't tied to gold, silver, or any other commodity. Instead, it rests on legal recognition, the stability of the issuing country, and the trust of those who use the currency for trade, savings, and contracts.
Why fiat is the reference for stablecoins
The vast majority of global commerce, financial contracts, and reserve holdings are denominated in fiat currencies. This makes fiat currencies the natural reference point for stablecoins. By denominating in a widely used, relatively stable currency such as the US dollar, a stablecoin can offer the practical benefits of fiat (price stability, broad acceptance) with the technical advantages of blockchain (transferability, programmability, transparency).
Steady and the US dollar
STDY is a US dollar-denominated stablecoin that tracks the world's primary reserve fiat currency. This means one STDY token is intended to represent one US dollar in value. Steady's reserves are held in USD-denominated assets, maintaining a direct and verifiable link to the fiat currency it tracks.
Related Terms
Peg
ReadA peg is the fixed reference value a stablecoin is designed to track, typically a fiat currency like the US dollar.
Stablecoin
ReadA stablecoin is a type of cryptocurrency designed to maintain a stable value by being denominated in a reference asset, typically a fiat currency like the US dollar.
Other Glossary Items
Learn about common and essential terms related to Steady and other stablecoin protocols.
Algorithmic Stablecoin
ReadAn algorithmic stablecoin attempts to maintain its value through automated rules that adjust token supply based on market demand, rather than holding equivalent reserve assets.
AML
ReadAML (Anti-Money Laundering) refers to the laws, regulations, and procedures designed to prevent the use of financial systems for laundering the proceeds of crime.
APY
ReadAPY, or Annual Percentage Yield, is the standardized rate of return an asset generates over a year, including the effect of compounding.
Arbitrum
ReadArbitrum is a Layer 2 blockchain network built on top of Ethereum, designed to offer faster and cheaper transactions while inheriting Ethereum's security and infrastructure.
Asset Backing
ReadAsset backing refers to the real-world or on-chain assets held by the issuer to support the value of every token in circulation.
Asset Locking
ReadAsset locking refers to restricting access to funds for a defined period or condition, during which they cannot be transferred or used.
Asset Segregation
ReadAsset segregation is the practice of keeping client or backing assets separate from the issuer's operational funds, protecting them from the issuer's other obligations.
Audit
ReadAn audit is an independent examination of a protocol's code, reserves, or operations by qualified third parties to verify accuracy and compliance with stated claims.
Backing
ReadBacking refers to the assets or mechanisms that support a stablecoin's value and help it maintain its intended reference value.
Blockchain Network
ReadA blockchain network is the system of connected participants and infrastructure that validates, records, and maintains data on a specific blockchain.
Blockchain
ReadA blockchain is a distributed digital ledger that records transactions across a network of computers in a secure, transparent, and tamper-resistant way.
Bridge
ReadA bridge is a mechanism that enables the transfer of assets or data between different blockchain networks.
Clarity Act
ReadThe Clarity Act is a proposed US legislative framework intended to clarify the regulatory treatment of digital assets, defining when they should be treated as securities versus commodities.
Collateralization / Over-collateralization
ReadCollateralization refers to the ratio between the value of assets held in reserve and the value of tokens issued. Over-collateralization means holding more in reserves than the value of tokens issued.
Composability
ReadComposability refers to the ability of different protocols, contracts, and tokens on a blockchain to interact and combine with each other seamlessly.
LearnMoreAboutSteady
Transparency Portal
reserves, statements, audits, smart contract, and more.
FAQs
Discover the basics about Steady in our frequently asked questions.
Contact Us
questions, feel free to get in touch. We'll be happy to help.
