Stablecoins, RWA & Tokenization

How does a stablecoin maintain its peg?

A stablecoin maintains its peg through the mechanism that backs each unit and lets holders redeem at the reference value. Fiat-backed stablecoins hold cash and short-term reserves so one token can be exchanged for one dollar, while crypto-backed and algorithmic designs use over-collateralization or supply adjustments. For example, if a token trades below a dollar, arbitrageurs buy it cheaply and redeem it for full value, pushing the price back. The peg holds only as long as the backing and redemption process function as intended.