Peg

Peg means fixing or linking the price of one asset to the price of another asset. In this context, it is used to maintain a certain exchange rate relationship between the two.
Role of Peg in Finance:
Peg is often applied to stablecoins, which are digital assets that maintain a stable value against traditional currencies. In such cases, there is a mechanism that obliges the issuer to maintain a certain exchange rate.
Stable Coins:
In the context of cryptocurrencies, such as stablecoins (stable coins), a peg is used to tie the value of a digital asset to the price of a unit of traditional currency, such as the US dollar. This allows stability of value and facilitates transactions.
Peg vs. Exchange Rates:
The peg mechanism regulates the exchange rate between assets, keeping it at a fixed level. If the exchange rate begins to diverge from the set value, this can result in issuer intervention to restore stability.
Technology Solutions:
In some cases, technological solutions such as blockchain-based smart contracts are used to automatically adjust the supply and demand of an asset and maintain peg.
Pegging to Other Assets:
In addition to stablecoins, pegging can be applied to other assets where maintaining a certain value relationship is important for market stability.
Peg Challenges:
Maintaining pegs can be a challenge, especially in an environment of volatile market volatility. Risks exist when market demand and supply do not remain stable.
Application in the Economy:
The concept of peg is also applicable in a broader economic context, where specific exchange rates can be established between different countries or regions.
In short, a peg is a mechanism that serves to maintain a certain value relationship between two assets, and its application can range from finance and cryptocurrencies to the international economy.