What is a stablecoin, and how does it keep its peg?
A stablecoin is a token built to track $1. Its peg holds because anyone eligible can mint or redeem near $1, so arbitrage corrects drift. Backing ranges from fiat reserves to over-collateralized crypto to hedged derivatives.
In this article
- 01Why stablecoins exist
- 02The core idea: mint, redeem and arbitrage
- 03The main types of stablecoin
- 04What breaks a peg
· 7 min read

