What is Peg?
The target price a stablecoin or wrapped asset is meant to hold, usually $1.
A peg is a promise about price. Holding it requires reserves, collateral or an algorithm that keeps supply and demand balanced.
When a peg breaks it is called a depeg. That has happened to fiat-backed, crypto-backed and algorithmic designs; the difference is how far and how fast.
Related terms
- StablecoinBasics
A token designed to hold a constant price, usually one US dollar, by holding reserves or collateral.
- Wrapped assetBasics
A token that represents an asset from another chain, held by a custodian or a bridge contract.
- CollateralDeFi
Assets locked to back a loan or a stablecoin, seized if the position falls below its ratio.