Definition ∞ A reserve strategy defines how an entity manages its holdings of assets, often stablecoins or other collateral, to back liabilities or maintain stability. This involves crucial decisions about asset allocation, liquidity management, and risk exposure. A sound strategy ensures financial robustness.
Context ∞ For stablecoins and decentralized finance (DeFi) protocols, a robust reserve strategy is paramount for maintaining peg stability and user confidence. News often scrutinizes the composition, transparency, and oversight of these reserves, particularly following market volatility or regulatory pronouncements concerning asset-backed digital currencies. Effective reserve management is a key factor in the credibility and adoption of these digital instruments.
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