# Pegging All Baki ***zTokens*** are overcollateralized, meaning that they will always guarantee sufficient value to back the ***zToken.*** Additionally, this will incentivise users to maintain the peg through adjusting the supply of zToken. Lastly, since any swap between currencies will be handled by the oracle, only the USD currency peg needs to be maintained to secure the entire system. ### Collateral Most importantly, to maintain a peg any protocol needs to ensure that the collateral balance is always greater than the outstanding debt. Unlike other collateralized debt position protocols, such as Maker DAO (DAI) or Abracadabra (MIM), Baki will exclusively use stable coins as collateral. The rationale behind this is to flip the traditional model found within crypto to back stable assets with volatile currencies. This is specifically done to avoid a situation where a user's position is liquidated due to movements in the collateral, rather than in movements in the FX markets that Baki's ***zTokens*** would track. Moreover, Baki's collateralization ratio of 150.00% creates a buffer should there be any significant shocks in the FX prices. In the long term to make the protocol more capital efficient, this can be lowered in the provided protocol liquidity has enough depth. ### Trading Above the Peg If ***zUSD*** is trading above $1.00, then minters are incentivised to mint ***zUSD*** and sell it to earn the premium themselves. Additional minting of ***zUSD*** will drive the price down to the peg of $1.00. ### Trading Below the Peg If ***zUSD*** is trading below $1.00, then minters are incentivised to burn their ***zUSD**.* Users can buy back their debt at a discount since Baki assumes that zUSD always equals $1.00. The reduction of the supply of ***zUSD*** will result in the price returning to the $1.00 peg. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.baki.exchange/features/pegging.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.