How does Tether cryptocurrency maintain its peg to the US dollar?

3 answers

• phoenix2023Feb 07, 2022 · 4 years ago
  Tether cryptocurrency maintains its peg to the US dollar through a combination of reserve backing and market intervention. Tether claims that each Tether token is backed by one US dollar held in reserve. This reserve is audited by a third-party firm to ensure transparency. When the price of Tether deviates from the US dollar, Tether Limited, the company behind Tether, steps in to buy or sell Tether tokens on the market to bring the price back in line with the US dollar. This intervention helps to maintain the stability of Tether's value.
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• Sabura AslinaOct 31, 2021 · 4 years ago
  Tether cryptocurrency is able to maintain its peg to the US dollar by utilizing a combination of supply and demand dynamics. When the price of Tether rises above the US dollar, the market responds by selling Tether tokens, which increases the supply and lowers the price. Conversely, when the price of Tether falls below the US dollar, the market responds by buying Tether tokens, which decreases the supply and raises the price. This constant balancing act helps to keep Tether's value closely aligned with the US dollar.
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• Green KellyJun 30, 2020 · 5 years ago
  Tether cryptocurrency, like other stablecoins, maintains its peg to the US dollar by leveraging a combination of market forces and reserve management. Tether Limited, the company behind Tether, actively manages the supply and demand of Tether tokens to ensure that the price remains stable. Additionally, Tether maintains a reserve of US dollars to back each Tether token, providing a sense of security and confidence in its value. This approach has helped Tether maintain its peg to the US dollar and establish itself as one of the leading stablecoins in the cryptocurrency market.
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