The asset held to back a stablecoin's value and support redemption.
Collateral is what a stablecoin holds to back the value of its outstanding supply. For fiat-backed coins, the collateral is bank deposits and Treasury bills. For crypto-backed coins like DAI, the collateral is overcollateralized deposits of ETH, wBTC, or other crypto. For algorithmic stablecoins, collateral may be partial or absent, replaced by supply-adjustment logic. Quality of collateral — its liquidity, custodian, jurisdiction, and reserve ratio — is the single biggest determinant of stablecoin risk.