Fiat-backed stablecoins are the most mainstream stablecoin type: issuers hold equivalent fiat currency (usually USD) or highly liquid assets (like short-term Treasuries) in banks or custodians, and must have corresponding reserves for every coin issued. Users can redeem stablecoins for fiat 1:1 at any time. USDC and USDT are the two largest fiat-backed stablecoins by circulation. Their advantage is high price stability and an intuitive mechanism; the core risk lies in trust in the issuer — whether reserves are real and sufficient depends entirely on issuer integrity and audit transparency.

Reserve ratio is the proportion of actual reserve assets held by a stablecoin issuer relative to the total supply of stablecoins in circulation. A ratio of 100% means every circulating stablecoin is backed by equivalent real assets; below 100% indicates an over-issuance risk — if all holders redeem simultaneously, the issuer may be unable to pay in full. Reserve ratio is one of the most direct indicators for assessing the health of a fiat-backed stablecoin, but the ratio alone is just the starting point: the quality and liquidity of reserve assets matter equally.