# FAQ

**How is HYDT pegged to 1 USD?**

HYDT Stablecoin is USD-pegged stablecoin backed by BNB collateral, using innovative soft-peg  mechanism to keep it's peg in reliable and flexible way.

Protocol will automatically buy back and burn HYDT with reserve balance(collateral) when HYDT price is below peg range, and mint and sell HYDT when HYDT price is above peg range. [Check details](https://hydtprotocol-documents.gitbook.io/hydt-protocol-document/how-it-works#how-hydt-stablecoin-maintains-1-1-peg-against-usd)&#x20;

**Is 1:1 redemption always possible?**

HYDT can be exchanged for other USD stablecoins on exchanges, but the protocol does not provide direct 1:1 redemption for users. While the protocol will automatically mint/redeem HYDT to make the HYDT price close to 1 USD, your redemption rate will depend on the HYDT/USD exchange rate at the time.

**Is HYDT Protocol sustainable?**

While offering a higher APY than most stablecoin yield products, the HYDT protocol has a unique and flexible soft-peg mechanism that effectively eliminates the risk of running out of reserves to avoid HYDT becoming worthless. The protocol will continue to work even under extreme market conditions to keep depegging to a minimum.

**How do you mint HYDT?**

When the Mint HYDT feature is available, you can mint HYDT by paying the BNB at a rate of 1HYDT/USD. After the Mint HYDT feature is closed, the only way to obtain HYDT is to buy it on the market like Pancakeswap.

**Why is the HYDT staking locked for a certain period of time?**

HYDT staking offers 3 plans with 3-12 month staking period, paying out yield and principal at the same time. This system is designed to avoid bank run events which can cause huge depegging, by not allowing users to exchange full amounts of their HYDT staking to USD in a short period of time. Protocol encourages users to stake their HYDT in longer period staking plans by offering higher APY for longer staking period so that HYDT price could be stabilized further.

**Where does the yield come from?**

Simple answer to this question is: Yield will be come from collateral price appreciation in long term. HYDT Protocol's Staking product is inspired by Luna USDT to some extent, with Stablecoin's peg mechanism and overall sustainability significantly improved.&#x20;

You can check how our product is designed to prevent disasters like what happened to Luna UST, yet provides fixed high yield to HYDT Stablecoin Staking users [here](https://hydtprotocol-documents.gitbook.io/hydt-protocol-document/information/never-again-luna-terra-ust-collapse)
