Peg (Stablecoin)

A peg refers to a predetermined price that establishes the exchange rate between two assets. Stablecoins, unlike most assets that fluctuate with market forces, are pegged to assets such as the U.S. dollar to maintain price stability and protect investors from market volatility. Stablecoins can have a hard peg or a soft peg, and different types of stablecoins employ various mechanisms to maintain their peg. These mechanisms include backing the stablecoin 1:1 with fiat currency reserves, using crypto-collateralized models, implementing supply-modifying techniques, and employing other peg-maintaining designs.