An Algorithmic Stablecoin employs an algorithm to control its supply/demand to maintain its stability in relation to another asset.

Unlike other stablecoins, which are typically backed by physical reserves of the underlying asset, algorithmic stablecoins are designed to maintain their peg through the use of algorithms and smart contracts. These algorithms automatically adjust the supply of the stablecoin in response to changes in demand, in order to maintain its peg.

This approach can offer some advantages over traditional stablecoins, such as the ability to respond more quickly to changes in the market and potentially lower transaction costs. However, algorithmic stablecoins also come with some risks, such as the potential for technical failures or malicious attacks on the algorithms.