Soft Peg

A soft peg is a particular type of exchange rate model applied to a currency to ensure its value relative to a reserve currency or a basket of currencies. In the context of blockchain, soft pegs are commonly utilized for stablecoins to maintain their 1:1 ratio with a fiat currency like the U.S. dollar. Soft pegs typically allow for a limited degree of financial flexibility to handle economic fluctuations and shocks.