A fiat-pegged stablecoin is a type of cryptocurrency designed to maintain a stable value by linking it to a fiat currency, such as the U.S. dollar or the euro. This stability is achieved by backing the stablecoin with reserves that are equal to the amount of coins in circulation.When users purchase a fiat-pegged stablecoin, they do so by exchanging it for a specific amount of fiat currency. For every stablecoin issued, an equivalent amount of fiat currency is held in reserve. This mechanism helps to ensure that the stablecoin can be redeemed at a fixed rate, often at 1:1 with the fiat currency it’s pegged to.These stablecoins are popular for providing a way to engage with blockchain technology while minimizing the volatility typically associated with other cryptocurrencies. They are commonly used for trading, remittances, and as a medium of exchange, allowing users to move values with ease while avoiding drastic price fluctuations.