PegNet is a decentralised stablecoin network designed to facilitate seamless value storage, transfers, and conversions across multiple asset classes, including fiat currencies, cryptocurrencies, and commodities. It operates as a state channel on Ethereum and integrates with other blockchain platforms. PegNet allows users to self-issue pegged assets without counterparty risk, collateral requirements, or reliance on smart contracts. The network aims to provide a cost-effective and borderless solution for payments, asset conversions, and financial interactions.

PegNet leverages a mining mechanism, using the LXRHash proof-of-work algorithm, which is optimised for CPU mining. This design reduces energy consumption compared to traditional proof-of-work systems and enables broader participation in mining. Miners submit price data for assets, which is recorded on the Factom blockchain and used to maintain a decentralised set of exchange rates. Transactions on PegNet are processed at a fixed cost of approximately 1/10th of a cent, making it a low-cost solution for transferring value across assets.

PEG is the native utility token of PegNet. It serves as the network's primary medium for mining rewards, transaction fees, and asset conversions. Initially, PEG’s value was algorithmically linked to the aggregate market value of assets within the PegNet system, but it later transitioned to a market-determined price. PEG is the only token within PegNet that is not pegged to an external asset, allowing it to act as the liquidity backbone of the network.

The PegNet ecosystem supports a wide range of pegged assets, designated with a "p" prefix (e.g., pUSD for US dollars, pBTC for Bitcoin, pGold for gold). These assets are interchangeable at oracle-determined exchange rates, with conversions executed entirely on-chain. PEG plays a key role in this process, as it can be used to facilitate trades and arbitrage opportunities within the system.

PEG has several core functions within the PegNet network:

• Mining Rewards: Miners are rewarded in PEG for submitting accurate market price data using the LXRHash proof-of-work algorithm.
• Asset Conversions: PEG can be used to convert between pegged assets within PegNet at real-time market rates determined by decentralised oracles.
• Transaction Fees: PegNet transactions require minimal fees, paid in PEG. These fees are burned, helping regulate token supply.
• Arbitrage and Market Stability: PEG allows traders to take advantage of price differences between PegNet’s internal pricing and external exchange rates, helping stabilise the system.
• Interoperability: PegNet aims to integrate with Ethereum and other blockchain networks, allowing PEG to be used in cross-chain transactions and decentralised finance applications.