DeFi & Yield

What is a crypto-backed stablecoin like DAI and how does it stay pegged?

A crypto-backed stablecoin is a token designed to hold a steady value, usually one US dollar, by being backed with other cryptocurrencies locked as collateral rather than cash in a bank. To absorb crypto's volatility, the system is overcollateralized: more value is locked than the stablecoin issued. The peg holds through mechanisms like liquidating collateral, adjusting fees, and arbitrage that nudges the price back toward a dollar. For example, DAI is minted against collateral deposited in smart contracts. Understanding how stability is engineered, not assumed, reflects the research-led approach we take to crypto at Qatobit. Read our methodology.