Who Makes It Worth One Dollar?
Separate target, market, and oracle prices, then inspect the exit path that makes a peg more than a label.
- Separate target, market, and oracle prices
- Explain why redemption is a key stablecoin promise
- Trace supply burn and reserve release in one state change
- PREVIOUSCourse introduction
- CURRENTWho Makes It Worth One Dollar?
Separate target, market, and oracle prices, then inspect the exit path that makes a peg more than a label.
- NEXTWhy Can $100 Mint Only 66?
Think about these questions first.
Choose an answer before opening the explanation. You can add anything unexpected to your review list.
Q01If a stablecoin trades at $1, is its peg mechanism healthy?＋
A temporary print can equal $1 while redemption is broken or reserves are unusable. A peg is better understood as an executable exit path, not a static number on screen.
“A stablecoin is worth one dollar” is not a fact guaranteed by its name. It is a path that participants can inspect: someone can issue under a rule, and someone else believes they can exit under the same rule. Put that path on the lab bench first.
Separate three prices
This lab uses virtual USD-LAB as the stablecoin and COLLATERAL as the reserve asset. It shows three prices at once:
- Target price: the 1.00 USD value the protocol wants USD-LAB to represent;
- Market price: the price participants are willing to trade externally;
- Oracle price: the input the protocol uses to value its reserves.
They may start equal, but that does not make them the same forever. The target becomes more than a slogan only when issuance, reserves, and redemption rules can actually execute.
COLLATERAL → USD-LAB
Put a one-dollar target stablecoin into a state machine and watch minting, price, redemption, and reserves define the stability boundary.
Build an issuance and redemption path, then see how a target price becomes executable.
- Wallet collateral
- 1,000
- Your USD-LAB
- 0
- Lost reserves
- 0
- Total redeemed
- 0
Supply is a protocol promise; reserves are the assets actually available at exit. Keep both on the same ledger.
Move the outside market, then choose when the oracle updates. Current deviation 0.00%.
Supply does not shrink automatically when reserves are lost. Apply loss, redeem part of the balance, and inspect coverage and exit capacity.
Deposit collateral, then mint USD-LAB. Target, market, and oracle prices are three different states.
- 01
USD-LAB created：target price 1.00 USD, minting must be backed by collateral.
Use the slider to return to an earlier step. Continuing from there replaces the later history with a new sequence.
Expand: how this step works
targetPrice = 1.00 USD
redeem(amount):
require holderBalance >= amount
burn(amount)
collateralOut = amount × targetPrice / oraclePrice - fee
reserve -= collateralOut
The burn matters: redemption does not copy a token to the next holder; it reduces supply and releases an asset from reserves. Real protocols also handle minimum units, fees, liquidity, and pause controls.
Why can't a token named USD be guaranteed to trade at one dollar by itself?
The state you carry forward
You have separated “one dollar” into a target, a market price, and an exit. Next, ask how much safety buffer collateral must leave before the protocol can issue more USD-LAB.