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The rise of cryptocurrencies has created a huge glossary of new terms to understand, from NFTs to DeFi.

Case in point: stablecoins, an increasingly popular avenue for investors and companies looking to get involved with cryptocurrencies. One of the reasons is that stablecoins are somewhat immune to the huge price fluctuations that are par for the course with Bitcoin, Ethereum, and Dogecoin, to name a few well-known tokens.

As a result, the market for stablecoins has boomed. As of May, total stablecoin supply had rocketed to over $100 billion, up from only around $10 billion a year earlier.

A recent tipping point for stablecoins was a meeting convened in July by Treasury Secretary Janet Yellen that brought together a group of top economic policymakers—including Federal Reserve chair Jerome Powell and Securities and Exchange Commission chair Gary Gensler—to discuss the “rapid growth” and “potential uses” of stablecoins.

So what are stablecoins, how are they different from your typical cryptocurrencies, and why is there so much interest around them? Here’s what you need to know:

What is a stablecoin, and how is it different from typical cryptocurrencies?

A stablecoin is a type of cryptocurrency whose value is attached to that of a separate asset, such as fiat currencies like the dollar and euro or commodities like gold and oil.

Stablecoins get their stability from being pegged to assets whose values fluctuate relatively little. Because of this, their price is usually steadier than typical cryptocurrencies like Bitcoin, Ether, and Dogecoin, which are not backed by any underlying asset and frequently fluctuate in value.

What are stablecoins used for? Can you transact with stablecoins?

Stablecoins are most commonly used for buying and selling other cryptocurrencies on crypto exchanges, by converting fiat currency into stablecoins and using those stablecoins to buy and sell other crypto tokens. This is how the beleaguered, dollar-backed Tether became the most traded and ubiquitous stablecoin.

Beyond storing value, stablecoins are also being adopted by businesses, particularly by larger and more established companies getting into the crypto space. Payments giant Visa, for instance, is using the dollar-backed USD Coin (USDC) to facilitate crypto transactions, with the goal of letting people convert their crypto assets to buy everyday goods and services. Visa’s network also lets holders of Coinbase debit cards use their USDCs on purchases, without incurring the steep fees charged for other types of crypto transactions.

Stablecoins can also be used across a variety of “decentralized finance,” or DeFi, applications, including “yield farming”—whereby stablecoin holders lend their tokens to others and generate interest in return.

Where can you buy stablecoins? Why would you buy stablecoins?

Stablecoins are available on most major crypto exchanges including Coinbase, Binance, and Kraken. The attraction of stablecoins for investors is that they are usually a much safer and less volatile bet compared to fluctuation-prone tokens—even major ones like Bitcoin and Ether. That stability also makes stablecoins easier to transact with, and more attractive to institutional players looking to get into crypto.

What are the largest and most popular stablecoins?

By far, Tether is the largest stablecoin in circulation, accounting for more than half of total stablecoin market capitalization. The controversial token, which has faced scrutiny for exaggerating the extent to which it’s actually backed by U.S. currency, is also the third-largest cryptocurrency of any kind by market cap.

USD Coin, which is also tied to the U.S. dollar, is the second-largest stablecoin in circulation and the seventh-largest token of any kind. USDC has recently grown in market share—helped by its adoption by the likes of Visa, which is using it as an on-ramp toward facilitating crypto transactions. But like Tether, USDC is also now taking criticism for having claimed that every token is backed by $1 in cash, when it’s actually backed by a combination of cash and noncash assets like Treasury bonds, commercial paper, and corporate bonds.

Other notable stablecoins include the gold-backed Paxos Gold and the oil-backed Petro, which was issued by the government of Venezuela and backed by that country’s oil reserves.

Are stablecoins regulated?

Like much of crypto, most stablecoins operate in a regulatory gray area—though that will likely change in the near future. In the wake of July’s meeting on the matter, Treasury Secretary Yellen urged “the need to act quickly to ensure there is an appropriate U.S. regulatory framework in place” addressing stablecoins, with the Biden administration expected to issue policy recommendations “in the coming months.” SEC chair Gensler has also pointed to the need for greater investor protections in crypto, and stablecoins are unlikely to be exempt from that.

One related area that has drawn more interest recently is central bank digital currency (CBDC), government-issued digital tokens that would hold the same value as, and function just like, units of that country’s currency. They have been floated as a way for governments to circumvent stablecoins backed by their fiat currencies, and assert more control over the digital currency ecosystem. Asian countries are already developing CBDCs—with China currently piloting its “digital yuan”—and the Federal Reserve is expected to clarify its stance on digital currencies, as well as stablecoins, later this year.