Algorithmic stablecoins are a type of cryptocurrency that use an algorithmic mechanism to maintain a stable price without relying on a peg to a fiat currency. These stablecoins rely on a combination of smart contracts and algorithms to automatically adjust the supply of the stablecoin in response to changes in demand.

This means that the algorithm (or the smart contract) regulates the relationship between two tokens - one stablecoin and another cryptocurrency that backs the stablecoin.