Pegged currency

A “pegged currency” is a coin that is linked to another asset or currency in order to maintain a steady value. Pegging aims to stabilize the price of a crypto stablecoin, making it more suited for use in daily transactions.

There are various methods for pegging currencies. To name a few:

1. Fiat-Collateralized Stablecoins: these stablecoins are supported by fiat currency reserves, such as dollars or euros.
2. Crypto-Collateralized Stablecoins: the stablecoins of this sort are backed by a collection of other cryptocurrencies or digital assets. The collateralization ratio must remain consistent in order to preserve the stablecoin’s value.
3. Algorithmic Stablecoins: by utilizing smart contracts and algorithms, they seek to maintain a steady value by modifying the stablecoin’s supply in accordance with pre-established norms and market demand.

Tether (USDT), USD Coin (USDC), and DAI are a few well-known examples of pegged crypto currencies.

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