Crypto Basics

What are Stablecoins? - The Ultimate Guide for Beginners

Learn everything about Stablecoins with this comprehensive guide. Understand what Stablecoins are and how they provide stability in the crypto world.
S. Vishwa
6 Minutes
MIN

In the dynamic world of cryptocurrencies, change is the only constant. The value of Bitcoin, the largest and most well-known cryptocurrency, often rides a roller-coaster, skyrocketing one moment and nose-diving the next. 

Amidst such turbulence, Stablecoins emerge as a beacon of stability. These distinctive cryptocurrencies are meticulously designed to counter extreme price swings by anchoring their value to a reserve of stable assets, typically a fiat currency such as the US dollar.

But what exactly are Stablecoins, and why are they so crucial in the cryptocurrency ecosystem? Let's explore this in detail in our ultimate guide.

What are Stablecoins?

Stablecoins are a type of cryptocurrency that are designed to maintain a stable value relative to a specific asset or a pool of assets. They can be pegged to a currency like the US dollar or to a commodity's price such as gold. 

The primary purpose of Stablecoins is to bridge the gap between the traditional financial system and cryptocurrencies. 

They offer the best of both worlds – the speed, privacy, and accessibility of cryptocurrencies, and the reliable, stable value of traditional currencies.

How do Stablecoins Work?

Stablecoins derive their stability from the reserve of assets they are pegged to. These reserves can include fiat currencies, other cryptocurrencies, or commodities like gold. 

There are three main types of Stablecoins, each distinguished by the type of asset reserve they're pegged to.

Fiat-Collateralized Stablecoins: These Stablecoins are backed by fiat currencies at a 1:1 ratio. For every Stablecoin issued, there's an equivalent amount of fiat currency kept in reserve. This offers high stability but requires trust in the central authority managing the reserve.

Crypto-Collateralized Stablecoins: These are backed by other cryptocurrencies. Since cryptocurrencies are volatile, these Stablecoins are over-collateralized, meaning the total value of collateral is significantly higher than the value of Stablecoins issued. This buffer ensures that the Stablecoins value remains stable.

Non-Collateralized Stablecoins: These Stablecoins aren't backed by any reserve. Instead, they employ algorithms to manage the supply of the coin, much like a central bank manages the supply of fiat currency.

Why are Stablecoins Important?

Stablecoins are critical for several reasons:

Reduced Volatility: Stablecoins offer an escape from the wild swings of the crypto market without exiting the ecosystem entirely.

Crypto Transactions: They facilitate transactions in the crypto world, making it easier to trade on exchanges without converting to fiat currencies.

Stability in DeFi: Stablecoins form the backbone of the burgeoning DeFi (Decentralized Finance) sector, facilitating loans, interest-earning platforms, and more.

Global Transfers: Stablecoins enable fast and cheap global transfers, especially where local banking systems are inefficient.

List of Best and Popular Stablecoins

As of 2023, several Stablecoins have risen to prominence due to their stability, security, and usability. Here's a look at the top 5:

Tether (USDT): Tether remains the most widely used Stablecoin, primarily used in cryptocurrency exchanges for trading and hedging.

USD Coin (USDC): As a fully audited, transparent, and secure Stablecoin, USDC has gained significant trust in the crypto community.

DAI: Unlike most Stablecoins, DAI is not backed by fiat but by Ethereum-based assets. Its decentralized nature has made it a favorite in the DeFi sector.

Binance USD (BUSD): Launched by one of the biggest crypto exchanges, Binance, BUSD has quickly risen to prominence.

TerraUSD (UST): An algorithmic Stablecoin, UST has seen significant growth due to its use in the Terra ecosystem, particularly for yield farming.

Also Read - USDT vs USDC - An in-depth Comparison

Stablecoins and Crypto Regulation

Stablecoins have been a topic of regulatory discussions worldwide. On one hand, they represent a way for the public to access digital currencies without extreme volatility. 

On the other hand, the lack of a centralized authority and potential for misuse have raised regulatory eyebrows.

In response, some governments are exploring the creation of Central Bank Digital Currencies (CBDCs) to provide state-backed stable digital currencies. 

The crypto regulatory landscape for Stablecoins is thus evolving and is expected to shape their future significantly.

Risks and Rewards

Stablecoins offer numerous benefits, such as facilitating crypto transactions, providing an escape from crypto volatility, and acting as a crucial cog in the DeFi wheel. They are also excellent tools for cross-border transfers and remittances.

However, Stablecoins are not without risks. These include the volatility of collateral for crypto-backed Stablecoins, trust in the issuers for fiat-backed Stablecoins, and regulatory risks. Moreover, algorithmic Stablecoins are still experimental and can face issues in maintaining their pegs.

Future Outlook of Stablecoins

As we look to the future, Stablecoins are poised to play a crucial role in shaping the digital economy.

They will likely serve as the backbone of the global DeFi ecosystem, enabling efficient, decentralized, and non-custodial financial services. 

Moreover, Stablecoins could pave the way for programmable money, changing how we interact with financial systems fundamentally.

As technology advances and more people embrace digital currencies, Stablecoins might become increasingly commonplace, acting as a widely accepted and trusted means of exchange in the digital world.

Frequently Asked Questions

Q1. Can a Stablecoin lose its peg?

Yes, a Stablecoin can lose its peg if its value diverges from the asset it's pegged to. This usually happens due to market dynamics, like sudden demand changes or issues with the underlying collateral. However, most Stablecoin issuers implement mechanisms to restore the peg in such situations.

Q2. How are Stablecoins created or issued?

Stablecoins are typically issued by organizations or protocols when users deposit the requisite collateral. For fiat-collateralized Stablecoins, users deposit fiat currency with the issuer. For crypto-collateralized ones, users lock up crypto assets in a smart contract.

Q3. Can Stablecoins earn interest?

Yes, some DeFi platforms allow users to earn interest on their Stablecoins. This is done by lending your Stablecoins to others through the platform, who pay interest on their loans.

Q4. How can I buy Stablecoins?

Stablecoins can be purchased on a majority of cryptocurrency exchanges. Some platforms also allow direct purchase of Stablecoins with fiat currency.

Q5. What is a CBDC and how is it different from Stablecoins?

CBDC, or Central Bank Digital Currency, is a type of digital currency issued by a country's central bank. While it shares some similarities with Stablecoins, a CBDC is fully regulated and operates under the country's monetary policy. It's essentially a digital form of the country's fiat currency.

Q6. Can Stablecoins be used for remittances?

Yes, due to their stability and global accessibility, Stablecoins are an excellent option for cross-border transfers and remittances. They offer a way to move money internationally quickly and with relatively low fees.

Q7. Are Stablecoins secure?

While the blockchain technology underlying Stablecoins is generally secure, there can be risks. These include smart contract bugs for crypto-collateralized Stablecoins, and security of the reserves for fiat-collateralized Stablecoins. It's essential to use reputable Stablecoins and platforms.

Q8. Are all Stablecoins pegged to the US dollar?

While many Stablecoins are pegged to the US dollar, not all are. Some Stablecoins are pegged to other currencies like the Euro or commodities like gold. Others use a basket of assets for their peg.

Conclusion

Stablecoins represent a vital bridge between traditional finance and the burgeoning world of crypto. They combine the stability of fiat currencies with the advantages of cryptocurrencies, driving innovation in the financial sector.

While there are challenges to overcome, including regulatory hurdles and issues of trust and transparency, the future of Stablecoins seems bright. 

As we continue to march towards a more digital economy, Stablecoins may very well be a cornerstone of this new world.

Disclaimer

The information provided on this website does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the website's content as such.

Token Metrics does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.

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Token Metrics Team
Token Metrics Team

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Backtesting Token Metrics AI: Can AI Grades Really Predict Altcoin Breakouts?

Token Metrics Team
5 min
MIN

To test the accuracy of Token Metrics' proprietary AI signals, we conducted a detailed six-month backtest across three different tokens — Fartcoin, Bittensor ($TAO), and Ethereum. Each represents a unique narrative: memecoins, AI infrastructure, and blue-chip Layer 1s. Our goal? To evaluate how well the AI’s bullish and bearish signals timed market trends and price action.

Fartcoin:

The green and red dots on the following Fartcoin price chart represent the bullish and bearish market signals, respectively. Since Nov 26, 2024, Token Metrics AI has given 4 trading signals for Fartcoin. Let’s analyze each signal separately.

The Fartcoin chart above displays green and red dots that mark bullish and bearish signals from the Token Metrics AI, respectively. Over the last six months — starting November 26, 2024 — our system produced four significant trade signals for Fartcoin. Let’s evaluate them one by one.

The first major signal was bullish on November 26, 2024, when Fartcoin was trading at $0.29. This signal preceded a massive run-up, with the price topping out at $2.49. That’s an astounding 758% gain — all captured within just under two months. It’s one of the most powerful validations of the AI model’s ability to anticipate momentum early.

Following that rally, a bearish signal was triggered on January 26, 2025, just before the market corrected. Fartcoin retraced sharply, plunging 74.76% from the highs. Traders who acted on this bearish alert could have avoided substantial drawdowns — or even profited through short-side exposure.

On March 25, 2025, the AI turned bullish again, as Fartcoin traded near $0.53. Over the next several weeks, the token surged to $1.58, a 198% rally. Again, the AI proved its ability to detect upward momentum early.

Most recently, on June 1, 2025, Token Metrics AI flipped bearish once again. The current Trader Grade of 24.34 reinforces this view. For now, the system warns of weakness in the memecoin market — a trend that appears to be playing out in real-time.

Across all four trades, the AI captured both the explosive upside and protected traders from steep corrections — a rare feat in the volatile world of meme tokens.

Bittensor

Next, we examine Bittensor, the native asset of the decentralized AI Layer 1 network. Over the last six months, Token Metrics AI produced five key signals — and the results were a mixed bag but still largely insightful.

In December 2024, the AI turned bearish around $510, which preceded a sharp decline to $314 by February — a 38.4% drawdown. This alert helped traders sidestep a brutal correction during a high-volatility period.

On February 21, 2025, the system flipped bullish, but this trade didn't play out as expected. The price dropped 25.4% after the signal. Interestingly, the AI reversed again with a bearish signal just five days later, showing how fast sentiment and momentum can shift in emerging narratives like AI tokens.

The third signal marked a solid win: Bittensor dropped from $327 to $182.9 following the bearish call — another 44% drop captured in advance.

In April 2025, momentum returned. The AI issued a bullish alert on April 19, with TAO at $281. By the end of May, the token had rallied to over $474, resulting in a 68.6% gain — one of the best performing bullish signals in the dataset.

On June 4, the latest red dot (bearish) appeared. The model anticipates another downward move — time will tell if it materializes, but the track record suggests caution is warranted.

Ethereum

Finally, we analyze the AI’s predictive power for Ethereum, the second-largest crypto by market cap. Over the six-month window, Token Metrics AI made three major calls — and each one captured critical pivots in ETH’s price.

On November 7, 2024, a green dot (bullish) appeared when ETH was priced at $2,880. The price then surged to $4,030 in less than 40 days, marking a 40% gain. For ETH, such a move is substantial and was well-timed.

By December 24, the AI flipped bearish with ETH trading at $3,490. This signal was perhaps the most important, as it came ahead of a major downturn. ETH eventually bottomed out near $1,540 in April 2025, avoiding a 55.8% drawdown for those who acted on the signal.

In May 2025, the AI signaled another bullish trend with ETH around $1,850. Since then, the asset rallied to $2,800, creating a 51% gain.

These three trades — two bullish and one bearish — show the AI’s potential in navigating large-cap assets during both hype cycles and corrections.Backtesting Token Metrics AI across memecoins, AI narratives, and Ethereum shows consistent results: early identification of breakouts, timely exit signals, and minimized risk exposure. While no model is perfect, the six-month history reveals a tool capable of delivering real value — especially when used alongside sound risk management.

Whether you’re a trader looking to time the next big altcoin rally or an investor managing downside in turbulent markets, Token Metrics AI signals — available via the fastest crypto API — offer a powerful edge.

Backtesting Token Metrics AI across memecoins, AI narratives, and Ethereum shows consistent results: early identification of breakouts, timely exit signals, and minimized risk exposure. While no model is perfect, the six-month history reveals a tool capable of delivering real value — especially when used alongside sound risk management.

Whether you’re a trader looking to time the next big altcoin rally or an investor managing downside in turbulent markets, Token Metrics AI signals — available via the fastest crypto API — offer a powerful edge.

Research

Token Metrics API vs. CoinGecko API: Which Crypto API Should You Choose in 2025?

Token Metrics Team
7 min
MIN

As the crypto ecosystem rapidly matures, developers, quant traders, and crypto-native startups are relying more than ever on high-quality APIs to build data-powered applications. Whether you're crafting a trading bot, developing a crypto research platform, or launching a GPT agent for market analysis, choosing the right API is critical.

Two names dominate the space in 2025: CoinGecko and Token Metrics. But while both offer access to market data, they serve fundamentally different purposes. CoinGecko is a trusted source for market-wide token listings and exchange metadata. Token Metrics, on the other hand, delivers AI-powered intelligence for predictive analytics and decision-making.

Let’s break down how they compare—and why the Token Metrics API is the superior choice for advanced, insight-driven builders.

🧠 AI Intelligence: Token Metrics Leads the Pack

At the core of Token Metrics is machine learning and natural language processing. It’s not just a data feed. It’s an AI that interprets the market.

Features exclusive to Token Metrics API:

  • Trader Grade (0–100) – Short-term momentum score based on volume, volatility, and technicals
  • Investor Grade (0–100) – Long-term asset quality score using fundamentals, community metrics, liquidity, and funding
  • Bullish/Bearish AI Signals – Real-time alerts based on over 80 weighted indicators
  • Sector-Based Smart Indices – Curated index sets grouped by theme (AI, DeFi, Gaming, RWA, etc.)
  • Sentiment Scores – Derived from social and news data using NLP
  • LLM-Friendly AI Reports – Structured, API-returned GPT summaries per token
  • Conversational Agent Access – GPT-based assistant that queries the API using natural language

In contrast, CoinGecko is primarily a token and exchange aggregator. It offers static data: price, volume, market cap, supply, etc. It’s incredibly useful for basic info—but it lacks context or predictive modeling.

Winner: Token Metrics — The only crypto API built for AI-native applications and intelligent automation.

🔍 Data Depth & Coverage

While CoinGecko covers more tokens and more exchanges, Token Metrics focuses on providing actionable insights rather than exhaustively listing everything.

Feature                                                   Token Metrics API                                    CoinGecko API

Real-time + historical OHLCV              ✅                                                          ✅

Trader/Investor Grades                        ✅ AI-powered                                     ❌

Exchange Aggregation                         ✅ (Used in indices, not exposed)     ✅

Sentiment & Social Scoring                  ✅ NLP-driven                                     ❌

AI Signals                                               ✅                                                         ❌

Token Fundamentals                            ✅ Summary via deepdive         ⚠️ Limited

                                                                        endpoint

NFT Market Data                                  ❌                                                          ✅

On-Chain Behavior                               ✅ Signals + Indices                   ⚠️ Pro-only (limited)

If you're building something analytics-heavy—especially trading or AI-driven—Token Metrics gives you depth, not just breadth.

Verdict: CoinGecko wins on broad metadata coverage. Token Metrics wins on intelligence and strategic utility.

🛠 Developer Experience

One of the biggest barriers in Web3 is getting devs from “idea” to “prototype” without friction. Token Metrics makes that easy.

Token Metrics API Includes:

  • SDKs for Python, Node.js, and Postman
  • Quick-start guides and GitHub sample projects
  • Integrated usage dashboard to track limits and history
  • Conversational agent to explore data interactively
  • Clear, logical endpoint structure across 21 data types

CoinGecko:

  • Simple REST API
  • JSON responses
  • Minimal docs
  • No SDKs
  • No built-in tooling (must build from scratch)

Winner: Token Metrics — Serious devs save hours with ready-to-go SDKs and utilities.

📊 Monitoring, Quotas & Support

CoinGecko Free Tier:

  • 10–30 requests/min
  • No API key needed
  • Public endpoints
  • No email support
  • Rate limiting enforced via IP

Token Metrics Free Tier:

  • 5,000 requests/month
  • 1 request/min
  • Full access to AI signals, grades, rankings
  • Telegram & email support
  • Upgrade paths to 20K–500K requests/month

While CoinGecko’s no-login access is beginner-friendly, Token Metrics offers far more power per call. With just a few queries, your app can determine which tokens are gaining momentum, which are losing steam, and how portfolios should be adjusted.

Winner: Token Metrics — Better for sustained usage, scaling, and production reliability.

💸 Pricing & Value

Plan Feature                CoinGecko Pro            Token Metrics API

Entry Price                  ~$150/month                $99/month

AI Grades & Signals            ❌                               ✅ 

Sentiment Analytics            ❌                               ✅

Sector Index Insights          ❌                               ✅

NLP Token Summaries       ❌                                ✅

Developer SDKs                  ❌                                ✅

Token-Based Discounts     ❌                                ✅ (up to 35% with $TMAI)

For what you pay, Token Metrics delivers quant models and intelligent signal streams — not just raw price.

Winner: Token Metrics — Cheaper entry, deeper value.

🧠 Use Cases Where Token Metrics API Shines

  • Trading Bots
    Use Trader Grade and Signal endpoints to enter/exit based on AI triggers.
  • GPT Agents
    Generate conversational answers for “What’s the best AI token this week?” using structured summaries.
  • Crypto Dashboards
    Power sortable, filtered token tables by grade, signal, or narrative.
  • Portfolio Rebalancers
    Track real-time signals for tokens held, flag risk zones, and show sector exposure.
  • LLM Plugins
    Build chat-based investment tools with explainability and score-based logic.

🧠 Final Verdict: CoinGecko for Info, Token Metrics for Intelligence

If you're building a crypto price tracker, NFT aggregator, or exchange overview site, CoinGecko is a solid foundation. It’s reliable, broad, and easy to get started.

But if your product needs to think, adapt, or help users make better decisions, then Token Metrics API is in another class entirely.

You're not just accessing data — you're integrating AI, machine learning, and predictive analytics into your app. That’s the difference between showing the market and understanding it.

🔗 Ready to Build Smarter?

  • ✅ 5,000 free API calls/month
  • 🤖 Trader & Investor Grades
  • 📊 Live Bull/Bear signals
  • 🧠 AI-powered summaries and GPT compatibility
  • ⚡ 21 endpoints + Python/JS SDKs

👉 Start with Token Metrics API

Research

Python Quick-Start with Token Metrics: The Ultimate Crypto Price API

Token Metrics Team
10 min
MIN

If you’re a Python developer looking to build smarter crypto apps, bots, or dashboards, you need two things: reliable data and AI-powered insights. The Token Metrics API gives you both. In this tutorial, we’ll show you how to quickly get started using Token Metrics as your Python crypto price API, including how to authenticate, install the SDK, and run your first request in minutes.

Whether you’re pulling live market data, integrating Trader Grades into your trading strategy, or backtesting with OHLCV data, this guide has you covered.

🚀 Quick Setup for Developers in a Hurry

Install the official Token Metrics Python SDK:

pip install tokenmetrics

Or if you prefer working with requests directly, no problem. We’ll show both methods below.

🔑 Step 1: Generate Your API Key

Before anything else, you’ll need a Token Metrics account.

  1. Go to app.tokenmetrics.com/en/api
  2. Log in and navigate to the API Keys Dashboard
  3. Click Generate API Key
  4. Name your key (e.g., “Development”, “Production”)
  5. Copy it immediately — keep it secret.

You can monitor usage, rate limits, and quotas right from the dashboard. Track each key’s status, last used date, and revoke access at any time.

📈 Step 2: Retrieve Crypto Prices in Python

Here’s a simple example to fetch the latest price data for Ethereum (ETH):

import requests

API_KEY = "YOUR_API_KEY"

headers = {"x-api-key": API_KEY}

url = "https://api.tokenmetrics.com/v2/daily-ohlcv?symbol=ETH&startDate=<YYYY-MM-DD>&endDate=<YYYY-MM-DD>"

response = requests.get(url, headers=headers)

data = response.json()

for candle in data['data']:

    print(f"Date: {candle['DATE']} | Close: ${candle['CLOSE']}")

You now have a working python crypto price API pipeline. Customize startDate or endDate to get specific range of historical data.

📊 Add AI-Powered Trader Grades

Token Metrics’ secret sauce is its AI-driven token ratings. Here’s how to access Trader Grades for ETH:

grade_url = "https://api.tokenmetrics.com/v2/trader-grades?symbol=ETH&limit=30d"

grades = requests.get(grade_url, headers=headers).json()['data']

for day in grades:

    print(f"{day['DATE']} — Trader Grade: {day['TA_GRADE']}")

Use this data to automate trading logic (e.g., enter trades when Grade > 85) or overlay on charts.

🔁 Combine Data for Backtesting

Want to test a strategy? Merge OHLCV and Trader Grades for any token:

import pandas as pd

ohlcv_df = pd.DataFrame(data['data'])

grades_df = pd.DataFrame(grades)

combined_df = pd.merge(ohlcv_df, grades_df, on="DATE")

print(combined_df.head())

Now you can run simulations, build analytics dashboards, or train your own models.

⚙️ Endpoint Coverage for Python Devs

  • /daily-ohlcv: Historical price data
  • /trader-grades: AI signal grades (0–100)
  • /trading-signals: Bullish/Bearish signals for short and long positions.
  • /sentiment: AI-modeled sentiment scores
  • /tmai: Ask questions in plain English

All endpoints return structured JSON and can be queried via requests, axios, or any modern client.

🧠 Developer Tips

  • Each request = 1 credit (tracked in real time)
  • Rate limits depend on your plan (Free = 1 req/min)
  • Use the API Usage Dashboard to monitor and optimize
  • Free plan = 5,000 calls/month — perfect for testing and building MVPs

💸 Bonus: Save 35% with $TMAI

You can reduce your API bill by up to 35% by staking and paying with Token Metrics’ native token, $TMAI. Available via the settings → payments page.

🌐 Final Thoughts

If you're searching for the best python crypto price API with more than just price data, Token Metrics is the ultimate choice. It combines market data with proprietary AI intelligence, trader/investor grades, sentiment scores, and backtest-ready endpoints—all in one platform.

✅ Real-time & historical data
✅ RESTful endpoints
✅ Python-ready SDKs and docs
✅ Free plan to start building today

Start building today → tokenmetrics.com/api

Looking for SDK docs? Explore the full Python Quick Start Guide

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