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There are many kinds of stablecoins, below are the most common four types:

1. Fiat-Backed Stablecoins

The most popular stable coins are those that which is directly pegged to the fiat currency with a 1:1 ratio. Stablecoins are proportionate to the amount of fiat currency in reserve. It means that one stable coin is equal to a dollar.

For instance, the issuer may hold one million dollars and distribute one million tokens. Each token is worth one dollar. Users can freely trade these as they do with crypto transactions. The holders can exchange them to equivalent in USD at any time.

You can trade fiat-backed stablecoins on exchanges and redeem them from the issuer. As long as the backed asset is stable, it can guarantee that the value of tokens will not be high volatility. Examples: TrueUSD (TUSD), USD Tether (USDT), USD Coin, Diem.

2. Crypto-Backed Stablecoins

Cryptocurrency-backed stablecoins are conceptually similar to fiat-backed stablecoins. The main difference is that cryptocurrency-backed stablecoins are issued with cryptocurrencies as collateral. 

Cryptocurrencies are used to back this type of stablecoins on the blockchain, using smart contracts to issue the token. Users lock their cryptocurrency into the agreement to acquire this kind of stable coin. Then, if they want to get their collateral back, they have to pay stablecoins back into the same contract ( including any interest).

The technical implementation of this type of stablecoins is more complex than fiat-collateralized tokens. It may introduce a greater risk of exploits due to bugs in the smart contract code. Examples: DAI

3. Commodity Stablecoin

The value of commodity stability currency is fixed to one or more commodities; the most common commodities are gold, or silver, also with crude oil, natural gas, and various precious metals as collateral. The value of these commodities may increase over time, and It also increases the value of stablecoins. Examples: Digix Gold Tokens (DGX).

4. Algorithmic Stablecoin

Algorithmic stable coins are achieved by algorithms and smart contracts that manage the supply of the tokens issued. This monetary policy reflects that used by central banks to manage national currencies. If the price is lower than the price of the fiat currency it tracks, the algorithmic stable coin system will reduce the token supply. If the price is over the value of the fiat currency, new tokens will enter circulation to reduce the value of stablecoins. Examples: Basecoin, Carbon.