How Does the Peg of a Stablecoin Affect Its Use in Derivatives Settlement?
The stability of the stablecoin's peg is crucial because any deviation introduces basis risk into the settlement. If the stablecoin loses its $1 peg, the actual value of the profit or loss settled in that coin will be inaccurate.
Derivatives traders rely on the stablecoin's consistent value to accurately reflect their P&L from the underlying asset.
