What are different types of stable coins?

Stable coins are cryptocurrencies that try to offer the price stability with backed by reserved assets like USD, EURO, GOLD etc. There are three types of stable coins.

1. Fiat backed: A Fiat backed stable coin is a cryptocurrency that is backed by local or international currencies like USD, EURO, BDT, RUPI, GBP, Dinar etc. It is the most popular and used stable coins in cryptocurrency in most of the exchanges. Its volume is huge than others. USDT, USDC, BUSD, USDN, USDQ, USDC, USDS, USDU, USDX, USDA etc.

2. Crypto-collateralized: Crypto-collateralized works as a similarity of Fiat backed stablecoins but it is backed by cryptocurrencies not real assets like USD, Gold.  It helps to stable the volatile crypto market. Depending on the each dollar of volatility, it has to reserve one dollar value of cryptocurrency. Maker DAO (DAI), Synthetix are example of Crypto-collateralized stable coins.

3. Algorithmically Stabilized: Algorithmically stabilized coin is basically created on algorithm that can balance on a circulating supply of stablecoins. We know exchange rates of assets always fluctuates. So to maintain stability it needs some algorithm. Then it issues more coins if price of assets rises and simultaneously reduces the amount of coins if price reduces. Digix Gold Tokens (DGX) is the example of this stable coins.