What does 'getting pegged' mean in the context of cryptocurrency?

1 answers

• MzKawaiiJun 08, 2024 · a year ago
  Getting pegged in the context of cryptocurrency refers to the process of tying the value of a digital asset to the value of another asset. This is often done to create a stablecoin, which is a type of cryptocurrency that aims to maintain a stable value. By pegging a cryptocurrency to a stable asset, such as a fiat currency or a commodity, the value of the cryptocurrency remains relatively constant. This can be beneficial for users and investors who want to avoid the volatility typically associated with cryptocurrencies. For example, a stablecoin like USD Coin (USDC) is pegged to the US dollar, which means that 1 USDC is always equal to 1 USD. This pegging mechanism ensures that the value of the stablecoin remains stable, making it a reliable medium of exchange and store of value in the cryptocurrency market.
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