Dustin
Member
Fiat-backed stablecoins like USDT (Tether) and USDC (USD Coin) maintain their value by pegging their price to a reserve of fiat currencies, typically the US dollar. For each issued token, an equivalent amount of fiat currency or highly liquid assets, like Treasury bills or cash equivalents, is held in reserve. This ensures that holders can redeem their stablecoins for an equal amount of fiat currency, stabilizing the value of the tokens at $1. Regular audits and transparency reports are provided by some issuers to verify the reserves, enhancing trust in the stability and backing of these stablecoins.