Stablecoins: Transforming cryptocurrency investment

Two men sit under a sign of Credit Suisse displayed on a building in Lugano
Two men sit under a sign of Credit Suisse displayed on a building in Lugano Copyright AFP & FABRICE COFFRINI
By Joanna Adhem
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In the world of cryptocurrency, where volatility reigns supreme, stablecoins are emerging as a game-changer for risk-conscious investors. These digital assets offer a unique approach to crypto investment.


In Switzerland, for instance, a stablecoin tied to the Swiss franc provides investors with a reassuring sense of stability, as its value closely mirrors that of the national currency.

How do stablecoins operate?

Stablecoins derive their stability from being backed by reserve assets. These reserves can include established currencies like the US dollar or Swiss franc, precious metals such as gold, or even tangible commodities like crude oil. These assets serve as a stabilising force, anchoring the stablecoin's value.

Exploring different types of stablecoins

Fiat-Backed Stablecoins: These are backed by fiat currency, a government-issued currency not backed by commodities. For instance, Tether (USDT) is backed by a reserve of US dollars.

Algorithmic Stablecoins: Algorithms are employed to maintain the stability of these coins. TerraUSD (UST), for example, is algorithmically linked to the value of the US dollar.

Crypto-Collateralised Stablecoins: These are backed by other cryptocurrencies, providing stability but also introducing some level of risk.

Is Switzerland leading the crypto revolution?

The rising popularity of stablecoins demonstrates their ability to meet market demands by combining stability with the advantages of blockchain technology.

A prime example is the partnership between Lugano and Tether.

This collaboration enables the use of Bitcoin Tether and Lugano's LVGA points token for everyday transactions, positioning Lugano as a significant player in the European Bitcoin ecosystem.

Stablecoins are reshaping the crypto landscape, offering investors a safer haven in a volatile market while embracing the potential of blockchain innovation.

Watch the video above to learn more about stablecoins.

Video editor • Joanna Adhem

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