Fiat-Backed Stablecoin
A stablecoin whose issuer states that it holds cash and short-term government debt at least equal to the tokens in circulation.
The issuer creates tokens when an approved client sends money and destroys them when tokens are returned for redemption, so supply tracks the flow of funds into and out of the reserve. Reserves are typically weighted toward short-dated government bills, overnight repurchase agreements, and bank deposits, and the interest earned on them is the issuer's main income. Two exposures remain even with full backing: the banks holding the cash portion can fail, and the redemption channel is usually open only to vetted institutional clients above a minimum size, so ordinary holders exit through exchanges instead. Reserve composition is reported through periodic attestations, which are narrower in scope than a full financial statement audit.
In practice
In March 2023 the stablecoin USDC traded below one dollar for several days after part of its cash reserve sat at Silicon Valley Bank, which failed, and it returned to par once access to those funds was confirmed.
The common misunderstanding
Full reserves describe what the issuer owns, not how quickly anyone can convert; most holders cannot redeem directly and must sell on an exchange instead.
The figure this maps to
The value of stablecoins issued on, or bridged to, a particular blockchain.
Limits: Native issuance and bridged wrappers are easy to count twice: an issuer mints on one chain, a bridge locks that supply and mints a representation on another, and a careless total includes both. Issuers pre-mint inventory that sits in a treasury address awaiting distribution, which inflates reported…