Algorithmic stablecoins use self-regulating mechanisms to keep their private stablecoins pegged to another currency, a system that has had a rocky history. Typically, on-chain collateral consists of cryptocurrencies like BTC or ETH, fiat-backed stablecoins like USDC or USDT and a few nascent traditional financial assets brought on-chain (for example, there is a tokenized money market fund on Stellar, a tokenized green bond on Ethereum and some other efforts to tokenize traditional financial assets).

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• Source: https://www.coindesk.com/consensus-magazine/2023/01/27/fiat-backed-stablecoins-crypto-stablecoin-market/?utm_medium=referral&utm_source=rss&utm_campaign=headlines