Algorithmic Stablecoin

An algorithmic stablecoin maintains its value through a series of complex algorithms that control its supply, adjusting it based on the market demand to keep the price stable. Unlike traditional stablecoins, which are backed by fiat or other assets, algorithmic stablecoins rely on smart contracts to automatically mint or burn tokens in response to price changes. 

Terra's UST was an algorithmic stablecoin that maintained its peg to the US dollar by using its governance token, LUNA. When the price of UST fell below $1, LUNA was burned to reduce the UST supply, and when UST rose above $1, new UST was minted to restore equilibrium.