Stablecoin Complexity: Three Animals, One Name

Stablecoins have been making headlines lately, but the media often simplifies them to a single concept. However, there are actually three distinct types of stablecoins: public-chain stablecoins, private-chain stablecoins, and tokenized deposits.

The public-chain stablecoin is what most crypto natives know first. These tokens are fiat-collateralized, meaning that for every digital token minted on a blockchain, one real dollar sits in a bank account or short-term U.S. Treasury bill. USDT and USDC dominate this market, with a combined market cap of over $300 billion in 2026.

These tokens are permissionless, meaning anyone can hold them in their own wallet and send value to others without needing a bank's approval. They're also transparent, as every transaction is printed on a public ledger that anyone can audit.

On the other hand, private-chain stablecoins are used by banks for interbank settlements and large corporate payments. These tokens are minted on private blockchains where only approved clients participate, offering control and security for institutions.