Basic stablecoin terms

Blockchain

A blockchain is a distributed ledger stored across many systems, rather than a centralized one. Four core properties of blockchains make them ideal as finance and payment systems:

• Decentralization: No single bank controls transactions.
• Immutability: Past payment records cannot be altered.
• Transparency: Every transaction is publicly verifiable.
• Speed: Transactions can settle in seconds.

Popular blockchains include Ethereum, Solana, and the Bitcoin network.

Stablecoin

A stablecoin is a digital asset on a blockchain backed by fiat currency. US stablecoins are pegged to the dollar by means of underlying treasury bonds held at trusted financial institutions. Prominent US stablecoins include USDC, OUSD, RLUSD, and USDT.

The same stablecoin is often issued on several blockchains. USDC on Ethereum and USDC on Solana are the same stablecoin reaching the same value, moving over different rails. Because of this, every transfer specifies a digital asset and a blockchain.

Blockchain addresses

Blockchain addresses are used for sending and receiving stablecoins, or any other digital assets. They can be thought of as the 'routable accounts' of the network. Stablecoin transactions move value from one address to another.

Blockchain addresses are public, but a private key is required to move funds from a specific address.

An example of an Ethereum blockchain address: 0x71C5612436145a3765D7c5bc9ba7C28aB7e40525

Crypto wallets

Crypto wallets are digital tools that allow users to manage blockchain addresses, view balances, and sign transactions by securing private keys, rather than storing digital assets directly. These tools allow users to generate multiple addresses for improved privacy and asset organization.

Gas fees

Every blockchain charges a fee to include a transaction in its ledger, called a gas fee. Gas is paid in the network's native asset, not in the asset being transferred — so sending USDC on Ethereum requires a small amount of ETH in the sending wallet to cover gas. See Stablecoin at Lithic for how gas fees are handled on the Lithic platform.

On-ramp and off-ramp

Converting traditional currency into stablecoin is called on-ramping; converting stablecoin back into traditional currency is called off-ramping. Both are typically done through a regulated intermediary that holds the underlying reserves.