What is a peg in crypto?

Peg - a specified price used to determine the exchange rate between two assets; in crypto – a fixed asset price tied to a token. Let's find out Peg meaning, definition in crypto, what is Peg, and all other detailed facts. In traditional markets, a peg is the specified price that traders use to set the exchange rate between two assets.

What is a pegged cryptocurrency?

Unlike Bitcoin and other regular cryptocurrencies, a pegged cryptocurrency is designed to hold a steady, less volatile value. It holds its peg in one of three ways. One, it maintains a reserve of cash (fiat money) or cash-equivalent assets. The value of these assets approximately matches the total value of the stablecoin in circulation.

What is the rate of pegging a crypto asset to Fiat?

When pegging a crypto asset to fiat, such as the Us dollar, the rate is 1:1. So, if the issuer has about one million tokens of a coin pegged to USD, he has an equivalent of one million USD. Users could buy, sell and trade the tokens like other digital assets such as Bitcoin or Ethereum.

What is a currency peg?

A “peg” is a specified price for the rate of exchange between two assets. This is in direct contrast to “floating” currencies which have no hard price target and follow looser monetary policy. In the usual global context of currencies, a peg allows foreign currencies to be traded for the chosen base currency at a fixed exchange rate.