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.
Glossar
Oracles
Attestation ⎊ Within decentralized finance and sustainable blockchain ecosystems, attestation functions as a critical oracle service, verifying off-chain data integrity and provenance for on-chain smart contracts.
Liquidation
Trigger ⎊ Liquidation in cryptocurrency derivatives represents the forced closure of a trading position due to insufficient margin to cover accruing losses, a critical event impacting market stability.
Price Data
Input ⎊ Price data constitutes the foundational information detailing the current and historical trading values of financial assets, including cryptocurrencies, options, and derivatives.
Trustless Custodian
Architecture ⎊ Trustless Custodian refers to a decentralized architecture, typically implemented via a smart contract, that securely holds and manages collateral assets without requiring reliance on a centralized third party or human intermediary.