What does the term 'get pegged' mean in the context of cryptocurrency?

1 answers

• Alexey MoskaltsovJan 24, 2025 · 7 months ago
  When it comes to cryptocurrency, 'get pegged' means that a digital currency is tied to the value of another asset, usually a stablecoin or a fiat currency. This is done to provide stability and reduce the volatility that is often associated with cryptocurrencies. By pegging a cryptocurrency, its value is kept at a fixed ratio or within a specific range in relation to the asset it is pegged to. This can be achieved through various mechanisms, such as smart contracts or centralized reserves. The purpose of pegging is to create a more reliable and predictable value for the cryptocurrency, making it more suitable for everyday transactions and reducing the risk for users and investors.
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