How does UST maintain its peg to the USD in the world of cryptocurrency?

3 answers

• Dec 20, 2021 · 3 years ago
  UST, also known as TerraUSD, maintains its peg to the USD through a combination of algorithmic and market-driven mechanisms. The protocol uses an algorithmic stablecoin model, which adjusts the supply of UST based on demand and supply dynamics. When the price of UST deviates from the peg, the protocol incentivizes users to either mint or burn UST tokens to bring the price back in line with the USD. This mechanism helps to maintain the stability of UST in the cryptocurrency market.
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• Dec 20, 2021 · 3 years ago
  UST's peg to the USD is maintained through a process called arbitrage. When the price of UST deviates from the peg, traders can take advantage of the price difference by buying or selling UST on different exchanges. This arbitrage activity helps to bring the price of UST back in line with the USD. Additionally, the protocol has a mechanism in place to stabilize the price by adjusting the supply of UST. Overall, these mechanisms work together to ensure that UST maintains its peg to the USD in the world of cryptocurrency.
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• Dec 20, 2021 · 3 years ago
  UST, also known as TerraUSD, is a stablecoin that is designed to maintain a 1:1 peg with the USD. The protocol achieves this by using a combination of on-chain and off-chain stabilization mechanisms. On-chain, the protocol uses an algorithmic model that adjusts the supply of UST based on market demand. Off-chain, the protocol has partnerships with various exchanges and market makers who help to maintain the peg by providing liquidity and trading UST against the USD. This multi-faceted approach helps to ensure that UST remains stable and maintains its peg to the USD in the volatile world of cryptocurrency.
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