What Is a Pegged Currency?
A pegged currency is a currency whose value is fixed or closely tied to another asset, such as a foreign currency, commodity, or basket of assets. The peg is designed to keep the currency’s price stable relative to its reference asset. In traditional finance, this is often achieved through monetary policy and reserves managed by a central authority.
In the crypto space, pegged currencies are most commonly seen in the form of stablecoins, which are usually pegged to fiat currencies like the US dollar. These pegs are maintained through different mechanisms, including fiat reserves, crypto collateral, or algorithmic controls. The goal is to reduce price volatility and make the currency more suitable for payments, transfers, and savings.
A pegged currency may temporarily deviate from its target value due to market conditions, liquidity issues, or changes in confidence. Maintaining a reliable peg is critical for usability and trust.
KAST supports established pegged currencies like USDT and USDC, helping users maintain predictable value when transferring and spending digital assets without sharp price swings.
