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What is an algorithmic stablecoin?

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An algorithmic stablecoin is a type of cryptocurrency that aims to maintain price stability through the use of algorithms and smart contracts, without the need for collateral backing like traditional stablecoins such as USDT or USDC. These stablecoins adjust their supply based on market demand to keep the price stable against a reference asset or price target. Examples of algorithmic stablecoins include Ampleforth (AMPL) and Terra (LUNA).

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