A recent Medium post claims that the PEG protocol can help platforms turn their tokens into a collateral-backed stablecoins that would be volatility-resistant unlike Bitcoin, Ethereum or other assets that are not backed by any physical currency.
The new technology reportedly allows platforms to create stablecoins on the basis of any ERC20 token and peg them to any asset the creators pick.
How the PEG protocol works
Since stablecoins have become a trend and are emerging one after another, this offer of the PEG protocol may sound interesting to many crypto platforms that issue their own coins.
USDT, GUSD (Gemini Dollar), USDC, TUSD. Tether has been issuing more of its stablecoins on other ledgers, such as EOS and Tron and now intends to make a stablecoin on the basis of the Chinese yuan. Recently, a Bitcoin-pegged token launched on Binance Chain.
As per the Medium article, PEG allows making a stablecoin based on any ERC20 token and ensure that it is supported by a substantial amount of collateral.
As an example, the author of the article names BAT (the native currency of the decentralized Brave browser). Its stablecoin version can be created by depositing BAT into a smart contract integrated with BAT.
PEG starts with BUSD (Bancor-based token)
Stablecoins are a good choice if a client wants to work with a crypto platform but cannot rely on its token due to its highly volatile nature. In this case, an asset-pegged version of the coin would come in handy.
The PEG protocol has made BUSD, a stablecoin based on the Bancor token, calling it the first use-case of the protocol. Now, using the dApp, any user can utilize their BNT (the token of the Bancor network) for backing BUSD stablecoins.