Stablecoins that use algorithms and smart contracts to manage supply and demand, aiming to maintain their peg without direct collateralization.
Algorithmic stablecoins are digital assets that rely on automated processes, such as smart contracts and coded algorithms, to control their supply and maintain a stable price relative to a target asset. Unlike collateralized stablecoins, they do not necessarily hold reserves of the pegged asset. Instead, they often employ mechanisms that increase or decrease the token's supply in response to market demand and price fluctuations to keep the peg.