Why Do Stablecoins Exist?

Explains the background of stablecoins and how they fill the 'cash layer' gap in the crypto world.

{{{##anchor=preface}}} Preface To understand “what exactly is a stablecoin,” the first step isn’t memorizing abbreviations like USDT or USDC. Instead, ask: What was missing in the crypto world before stablecoins existed? Only by clearly seeing this “gap” can you understand later why various stablecoin designs, expansions, or failures exist — they’re trying to fill a specific hole, not just invent a new buzzword for hype. In this article, we won’t talk about specific products or returns yet. We just answer one question: Given that traditional finance already has a “cash layer,” why does the crypto world need to recreate an “on-chain money” system, and why must it be “stable”? {{{##anchor=part-1.2}}} 1. The Cash Layer in Traditional Finance: Looks Boring but Everyone Depends on It In the traditional financial system, there has long been a full set of “base-layer” instruments, collectively called the cash layer , including: Bank demand deposits Money market / cash management funds Short-term government bonds or short bond funds These have several common features: Low volatility : Net value rarely jumps 10% or drops 20% in a day. Always accessible : Can be withdrawn, paid, or transferr