Stablecoin
Dollar-pegged coin · USDT · USDC
A coin built to hold the value of a currency such as the US dollar one for one, with Tether (USDT) and USDC the best-known examples.
Simple explanation
Background: Korean exchanges trade in won only, with no US dollars, so stablecoins such as USDT are bought and sold for won there, at a price set by Korean demand.
Unlike Bitcoin, whose price swings, a stablecoin is designed to stay worth about one dollar (or one euro, and so on). Inside the crypto market it works like dollar cash: people use it to move money between exchanges or to park the proceeds after selling a coin.
The most common type is fiat-backed. For every coin it issues, the issuer holds the same value in reserves such as cash and short-term US Treasury bills, and customers with an account at the issuer can hand coins back for one dollar each (terms vary by issuer). Tether (USDT, launched in 2014), the largest by market value, and USDC (issued by Circle, launched in 2018), the second largest, both work this way. Other types are backed by more than their value in other crypto (DAI, for example) or try to hold the peg with an algorithm and no collateral.
One USDT is not always exactly one dollar. It is a market price that usually wobbles a little around $1, and trouble with the issuer's reserves or banks can push it well off the peg (a depeg). In March 2023, when Silicon Valley Bank failed with part of USDC's reserves inside, USDC briefly fell below $0.90 before recovering. In May 2022 the algorithmic stablecoin TerraUSD (UST) lost its peg and collapsed together with LUNA, causing heavy losses.
On Korea's won exchanges (Upbit, Bithumb, Coinone and Digital X, formerly Korbit) you can also buy and sell USDT or USDC for won (the markets differ by exchange). The won price follows Korean demand, not the bank rate, so it rises above the KRW/USD exchange rate when many people want to buy crypto and falls below it when they don't. How far the Korean USDT price sits above the exchange rate is the Tether premium.
It ties straight into the kimchi premium. CoinGaja uses Binance's USDT market as the overseas price and counts 1 USDT as $1, so if USDT drifts from $1, the overseas price in won drifts by the same amount. And when USDT itself costs more in Korea than the exchange rate, much of a coin's kimchi premium may come from the dollar (Tether) being expensive, which is why CoinGaja also shows a Tether-based kimchi premium.
Stablecoins are a common way to move money between Korean and overseas exchanges, including for kimchi premium arbitrage. Fast, cheap networks such as Tron (TRC-20) are popular, but sending on a network the receiving side does not support can lose the funds, so always match the withdrawal network. Sending ₩1,000,000 or more to another exchange also brings in the Travel Rule.
Know the risks too. A stablecoin is only as sound as its issuer's reserves and its ability to pay out on time. Issuers can freeze coins at addresses linked to crime, and rules differ by country, so some stablecoins are restricted in some regions. The US passed a stablecoin law (the GENIUS Act) in 2025, and Korea has been debating rules for won-based stablecoins.
Example
KRW/USD rate ₩1,400 → if 1 USDT = $1, it should cost about ₩1,400
USDT on Upbit ₩1,428 → Tether premium = 1,428 ÷ 1,400 − 1 = +2.00%
₩10,000,000 buys 10,000,000 ÷ 1,428 ≈ 7,003 USDT (before fees)
At the exchange rate it would buy 10,000,000 ÷ 1,400 ≈ $7,143 → the Tether premium costs you about $140 worth
If USDT falls to $0.97 (a depeg), the 7,003 USDT are worth 7,003 × 0.97 ≈ $6,793 (-3.00%)
※ Example numbers, for illustration only
See it on CoinGaja
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