# Peg Stability Module The introduction of the Peg Stability Module (PSM) is intended to prevent significant positive premiums on PUSD during large-scale buybacks, ensuring the redemption mechanism remains economically viable. • When the Active Redemption Mechanism is triggered, the Stability Fund directly buys back PUSD or purchases USDC, then uses the PSM to mint PUSD on a 1:1 basis with USDC. These PUSD are subsequently burned, thereby reducing the supply of PUSD in the market and restoring balance. • Once the demand for long positions recovers or the demand for PUSD decreases, the Stability Fund will execute the inverse process described above, minting PUSD through the protocol, exchanging it 1:1 for USDC through the PSM, and selling the USDC on the market. Essentially, the PSM acts as a safeguard for system stability in extreme situations. As the balance gradually returns to normal, the reliance on the PSM will be reduced to zero. --- # 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.pure.cash/pure.cash/balancing-mechanism/peg-stability-module.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.