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The biggest problem of cryptocurrency is that the volatility is high. From holding to transaction settlement, the value of the cryptocurrency may be higher or lower than the value when you bought it. Due to high volatility, cryptocurrency has been unable to achieve widespread use every day, such as in payment processes. In contrast with stable coins, there is no such this kind of problem. Therefore, the volatility of its price is low. Furthermore, the value of stable coin is fixed to fiat currency or other collateral. Consequently, it’s relatively safe and provides stability. 

PROS

Stable coins play a role in safeguard against high volatility when investors trade. As a haven asset in the cryptocurrency market, it also can be used as a medium for parking funds and transactions. In addition, it reduces transaction costs and speeds up cryptocurrency transactions.

CONS

Fiat-backed stable coins are less decentralized than ordinary cryptocurrencies because it still tethered to fiat currency, and a central entity is needed to hold the supporting assets. As a result, it may be limit by the regulations of fiat currency. 

It can also fight against inflation, currency depreciation, and other problems inherent in fiat currency. Although the fiat-backed stable coin is pegged to fiat currency, it doesn’t mean that you can exchange it without cost. 

Crypto-backed stablecoins are issued with cryptocurrencies as collateral. So compare to fiat-backed stablecoins and commodity stablecoin, you have to risk volatility for cryptocurrency.

The system of algorithmic Stablecoins is similar to the monetary system of the central bank, in reality, relying on public confidence on the platform to purchase bonds, stocks, etc., as an investment in the future. However, when people do not trust this platform, the bonds issued by the platform will plummet, and the currency system may collapse. So you have to bear all loss. 

Stablecoins are still new technologies, so it will take time to mature. Although there are some risks, stablecoins are played an essential role in the cryptocurrency markets. Stablecoins can not only be used as a medium of exchange but as a haven for traders. You can choose the stablecoin that you are suitable for when you are trading. The mechanisms of various stable coins will be more complete in the future.