The system by which a stablecoin maintains its peg — usually one of fiat-backed, crypto-backed, or algorithmic.
The peg mechanism is the design that keeps a stablecoin trading near its target. The three main families are: (1) Fiat-backed — issuer holds cash and Treasuries, users can mint/redeem at par. (2) Crypto-backed — users lock crypto collateral into a smart contract to mint the stablecoin; if collateral value falls, positions get liquidated. (3) Algorithmic — supply adjusts based on price signals, sometimes with a secondary volatility-absorbing token. Modern variants include tokenized-Treasury (BUIDL, USDY), delta-neutral yield (USDe), and hybrids.