What Does Pegged Mean in Crypto?

When you’re talking about something that’s pegged, what it typically means is that the value of that token is going to be tied down to the value of a fiat currency or a commodity. The idea in a certain sense is to be able to give crypto benefits or characteristics at least to a fiat currency or a commodity. There are plenty of benefits to doing this, and that’s exactly where we are going to take this article. First though we want to make sure that the term is fully understood.

A pegged asset AMM or DEX depending on the platform that is offering it, that is pegged to the value of the US dollar is going to be worth exactly a dollar. You can buy tokens of that stablecoin and be certain that they are going to be worth the same as the dollars that you have in your wallet. A token can also be pegged to the value of a commodity as we mentioned. The benefits of buying these different types of pegged assets could certainly vary. They offer multiple opportunities for investors.

Why Platforms Like To Use Pegged Assets

Plenty of platforms use pegged assets as a way to get their users on the same page. If you’re a global platform there’s a chance that you’ll get people wanting to access making investments in different fiat currencies. One of the ways that platforms have found that they can solve this problem is by essentially using stablecoins like mickey mouse dollars at disney world or a fair. You get everyone on the same currency and that makes it easier to be able to process the different transactions within the platform.

Another element that is more or less interesting to platforms is the idea of easing certain investors into the crypto world. Many people certainly like the advantages that cryptocurrencies bring to the table, particularly if they want to transfer large amounts of capital from one place to the other. Doing that through the traditional banking system is an expensive pain in the neck. Through a pegged asset exchange you can transfer crypto assets without having to buy into the volatility of the main cryptocurrencies. That volatility is still an element that keeps certain types of investors away. A stablecoin can essentially eliminate that issue completely.

Is A Pegged Asset A Good Investment? 

It all comes down to what you’re trying to do with your investment. If you are just using dollars to buy an asset that is pegged to the value of the dollar then naturally you’re not going to be able to gain much of anything. If you buy an asset that is pegged to the value of gold you can win or lose with the ups and downs in the price. At the same time though you have a crypto asset that you can trade directly. That’s something that will give you that sense of added value. As we’ve mentioned it comes down to what you invest in and what your strategy is to extract value from that asset.

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