🎯 1. What is a Stablecoin? Why Do We Need It?

➤ Problem:

In the real world, you can’t use gold for small daily transactions.

Example: You go to a shop to buy something for ₹5 or ₹10. You can’t say, “Here, take this tiny piece of gold worth ₹5.” Gold is not divisible, practical, or accepted for micro-transactions.

➤ Similarly in Crypto:

You can’t use Bitcoin or Ethereum for small $1, $2, $5 transactions because:

• Transaction fees (gas fees) are too high.
• Volatility — their prices swing wildly.
• Not practical for daily commerce.

Example: Paying $10 for coffee using Ethereum? You might pay $5 in gas fees alone — not worth it.

➤ Solution: Stablecoins

A stablecoin is a cryptocurrency designed to maintain a stable value, usually pegged to $1 (or another fiat like ₹1, €1, etc.). It allows:

• Low-cost micro-transactions.
• Daily use in DeFi, trading, payments.
• Stability in a volatile crypto market.

💡 2. How Does a Stablecoin Maintain Its Value?

➤ Key Principle: