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Token Pegged Pricing Mechanisms Meaning

Token pegged pricing mechanisms are systems designed to maintain a token’s value relative to an external reference, such as a fiat currency or commodity. These mechanisms may be collateral-backed, algorithmic, or hybrid.

They rely on supply adjustments, collateral management, and arbitrage incentives to keep prices aligned. Pricing mechanisms must respond rapidly to market stress to remain effective.

Robust pegged pricing frameworks are essential for stability-focused tokens used in payments, settlement, or risk management.

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