This page will give you a better understanding of the USD pegged stablecoin - WEN.
WEN is WENWEN Protocol’s USD pegged stablecoin. Users can borrow WEN by depositing approved collateral assets. WENWEN Protocol always considers WEN to be worth 1 USD. WEN is soft pegged to the U.S dollar.
Since WEN is USD pegged stablecoin, the stability mechanism relies on arbitrage. It is a simple and fast method to adjust the WEN price and keep it close to the peg.
- When the WEN price is below $1, a borrower can choose to purchase some WEN at this discount to repay part of the total amount of their debt. This will increase the demand for WEN and have an increasing price effect to bring WEN back to the peg.
- When the WEN price is above $1, users with approved collateral assets can choose to open a position by depositing their collateral and selling or using the borrowed WEN at a higher price. This will increase the supply of WEN and have a decreasing price effect to bring WEN back to the peg.
- When WEN price is trading differently on the markets, users might choose to purchase WEN at a lower price (below $1) and sell WEN for a higher price (above $1) on another market. This will close the price gap of WEN and bring the price back to the peg.