What Are ‘Smart Contracts’ and How Do They Enforce the Peg?

Smart contracts are self-executing agreements with the terms of the agreement directly written into code on a blockchain. In stablecoin systems, they enforce the rules for minting, burning, collateral management, and liquidation automatically and transparently.

They act as the trustless custodian and administrator, ensuring the peg mechanisms (like over-collateralization and liquidation) are executed without human intervention or centralized control.