Peg Stability Module
The Peg Stability Module (PSM) is one of the few mechanisms offered by Hedge to help further ensure that USH stays pegged to a dollar. The PSM allows users to swap USH for USDC and vice versa at a fixed rate.
Unlike the traditional Hedge vaults, the PSM has no borrowing mechanism. The contract simply swaps the coins directly and collects a fee at the point of transaction.
It is helpful where USH is trading above a dollar. Users can simply take advantage of the arbitrage opportunity by minting USH from USDC. This in turn will help bring the price of USH down closer to a dollar.
Likewise, in the event that USH is trading below a dollar, users can redeem their USH for USDC to take advantage of the arbitrage opportunity which eventually helps to revert USH back up to a dollar.
Do note that there is a capped amount that the peg stability module can hold.
- To mint USH from USDC - 0.75%
- To redeem USH to USDC - 0.1%