# Price Stability Mechanism

Peg management is enforced through two mechanisms:

1. **Dynamic Reserves**\
   All reserve balances are published on-chain, tracked in real-time. These include:
   * USD cash equivalents (audited banks)
   * On-chain treasuries (tokenized U.S. T-bills)
   * High-grade lending protocols (low-risk DeFi pools)
2. **Market Incentives**\
   In extreme scenarios (depeg or liquidity squeeze), users are incentivized to arbitrage, stake, or participate in rebalancing vaults that restore peg through programmatic buy/sell mechanics.

USD.T does not rely on unchecked minting or overcollateralized leverage to maintain parity.