# Pegging Mechanisms

This document explains how pegging mechanisms work in the bridge system.

## Stablecoin Pegging

### USD Stablecoins (USDT, USDC)

- Target price: $1.00 (1e18)
- Threshold: ±0.5% (50 basis points)
- Monitoring: Continuous via ReserveSystem price feeds
- Rebalancing: Automatic when deviation exceeds threshold

### WETH Pegging

- Target price: 1:1 with ETH (1e18)
- Threshold: ±0.1% (10 basis points)
- Monitoring: Continuous via ReserveSystem price feeds
- Rebalancing: Automatic when deviation exceeds threshold

## Commodity Pegging

All commodities are pegged through XAU (gold) as the base anchor.

### Formula

```
Commodity Price = XAU Price / XAU Rate
```

Example: If XAU = $2000/oz and XAG rate = 80, then XAG = $2000/80 = $25/oz

### Supported Commodities

- XAU (Gold) - base anchor
- XAG (Silver)
- XPT (Platinum)
- XPD (Palladium)
- Oil (WTI, Brent)

## ISO-4217 Currency Pegging

All currencies are triangulated through XAU.

### Conversion Formula

```
CurrencyA → XAU → CurrencyB
```

1. Convert CurrencyA to XAU: `amount / fromXauRate`
2. Convert XAU to CurrencyB: `xauAmount * toXauRate / 1e18`

### Example

Convert 2000 USD to EUR:
- USD XAU rate: 2000 (1 oz XAU = 2000 USD)
- EUR XAU rate: 1800 (1 oz XAU = 1800 EUR)
- Result: (2000 / 2000) * 1800 = 1800 EUR

## Rebalancing

When a peg deviates beyond its threshold:

1. Deviation is detected by peg manager
2. Rebalancing is triggered automatically
3. Reserves are adjusted to restore peg
4. Event is emitted for monitoring