Peg Defense & Liquidity

A stablecoin is only as good as its ability to stay stable. That might sound obvious, but it's where most systems fail: either by over-engineering game theory or underestimating volatility.

thUSD is built differently.

Its peg isn’t propped up by algorithms, speculation, or debt positions. It’s protected through a combination of real collateral, structured redemption mechanics, and active liquidity management. The system is designed to hold its peg through both regular market conditions and edge cases, with no reliance on reflexive tokenomics.

How Peg Stability Works

Peg stability starts with the backing. Each thUSD is fully collateralized by a diversified portfolio of real-world assets, with deep liquidity and transparent flows. This ensures that the market always has a reference point for value: one rooted in real performance, not narratives.

But it’s the mint and redemption structure that truly enforces the peg.

Minting:

• Only whitelisted custodians and authorized smart contracts can mint thUSD

• All minting occurs at a fixed 1:1 value (e.g., 1 USDC = 1 thUSD)

• Assets are only deployed into the portfolio after proper verification and allocation

Redemption:

• Authorized actors can redeem thUSD at par by burning tokens and unlocking the equivalent value from reserves

• If thUSD trades below $1, arbitrageurs can redeem for real-world collateral or USDC at face value, creating natural upward pressure

• In the case of a premium, additional thUSD can be minted and sold into the market, rebalancing supply

This two-way mechanism ensures price parity is consistently enforced without relying on unstable loops or governance delays.

Liquidity Infrastructure

Tharwa manages thUSD liquidity across both centralized and decentralized environments, giving users seamless access and reinforcing peg dynamics.

• On-chain liquidity pools: Key pairs (e.g., thUSD/USDC, thUSD/USDT) are seeded by the protocol and incentivized through TRWA emissions and points

• OTC marketplace: Peer-to-peer trades and large-scale thUSD swaps are routed through the OTC system, reducing slippage and protecting peg integrity during high volume events

• Redemption buffer: Liquid reserves (held in stable assets like USDC) are maintained to absorb sudden redemption surges or off-peg market events

• Whitelisted MM programs: Market makers are allowed to mint and redeem in bulk, keeping the peg tight and spreads narrow

The combination of DEXs, OTC rails, and custodian redemptions ensures that thUSD always has multiple pathways to liquidity.

Circuit Breakers and Monitoring

To prevent manipulation, cascading liquidations, or exploit attempts, Tharwa includes automated safeguards that operate 24/7:

• Price alarms: If thUSD trades outside a defined range, the protocol pauses key functions (e.g., minting, swapping)

• Volume triggers: Unusually large redemptions or deposits can temporarily halt execution until verified

• Multi-sig and governance layers: Critical parameters (like redemption thresholds) are protected by multi-signature authorization and DAO oversight

Combined with real-time reporting, these controls help Tharwa maintain user trust and protect long-term peg reliability.

💡 You can view the full minting, liquidity, and governance architecture on the previous page. This includes the systems that support peg stability and redemption logic.