What are algorithmic stablecoins?

Algorithmic stablecoins are like money that keeps its value even when everything else is going up or down.

Imagine you have a piggy bank that always has exactly 10 dollars inside, no matter how many times you take some out or add more. That’s what algorithmic stablecoins do, they try to stay at a fixed price, like 1 dollar, by using smart rules and math tricks.

Think of it like a robot babysitter. If the value of the coin goes up too much, the robot takes some coins out of circulation, like taking dollars from your piggy bank when you're not looking. If the value drops, the robot adds more coins in to help it go back up, just like adding extra money if you’ve spent a lot.

These robots follow special rules written by humans. They use math and sometimes other coins or assets to keep everything balanced. It's not magic, it's just clever counting and timing, like when your mom checks that you haven’t eaten all the cookies in one go.