Stablecoin Glossary
Stablecoin Peg
A stablecoin peg is the target exchange relationship between a stablecoin and its specified reference asset, unit of account, or basket. A dollar-referenced stablecoin targeting one dollar has a 1:1 peg to the US dollar.
Explanation
The peg establishes the value the stablecoin is designed to track. The secondary-market price can move above or below that target because of changes in liquidity, confidence, redemption access, reserve quality, or market conditions. For reserve-backed stablecoins, primary issuance and redemption can create arbitrage incentives that help align the market price with the target. Other stablecoin designs use collateral or protocol rules to pursue the same objective.
Why it matters
Stablecoins are used as money-like instruments because users expect their market value to remain close to the reference value. Persistent or severe deviations can impair payments, trading, collateral use, and confidence.
Example
A token targeting $1 that trades at $0.997 has moved below its peg even though the stated target remains $1.
Related terms
Last reviewed: September 2026