# Stablecoin S1

**Introduction**

In the realm of DeFi, decentralized stablecoins have become a cornerstone for various financial operations, such as trading, lending, and borrowing. Stablecoins backed by Liquid Staking and Restaking Tokens (LSTs and LRTs), sit at the cutting edge of innovation and play a pivotal role by providing borrowers, or holders, of the stablecoin with the lowest available risk in DeFi: the Ethereum and Bitcoin staking rates, which are a necessary parallel to the risk-free rate found within traditional financial (TradFi) markets.

S1 is a new multichain stablecoin issued by Segment Finance, focused on unlocking liquidity. It is purpose-built with parameters and features tailored specifically to realise the full potential of LSTs and LRTs. The new protocol is integrated within the Segment UI allows users to seamlessly borrow S1 using their LSTs/LRTs as collateral. 

By minting S1 with deposited assets, users can retain all of the rewards, points, and upside from owning an LST/LRT, and unlock their capital as S1, a stablecoin that can help them capture additional opportunities and yield on Segment or throughout DeFi.

S1 is a universal and capital-efficient stablecoin and is intended to be used for the [Segment's LST Payment Card](/protocol/lst-payment-card.md) in the feature. 

**How does S1 work?**

S1 is available in the same dApp as the main Segment platform. As a decentralised stablecoin on the Superchain and BTCFi network, S1 is minted by users (borrowers). 

As with all borrowing on Segment, a user must supply collateral on the core pool [(at specific collateral ratio)](/protocol/collateral-and-reserves.md) to be able to mint S1. Correspondingly, when a user repays a debt position Segment burns that user’s S1.

**Peg Stability Module**

The Peg Stability Module (PSM) is a crucial component of the Segment Protocol designed to maintain the value of the S1 stablecoin at $1. It functions similarly to the system provided by MakerDAO for DAI. 

S1 sustains its value via a stability fee system. This fee is a charge that users incur when they swap their minted S1. This fee system encourages users to either sell or buy S1 in response to its price fluctuations, thereby contributing to its stability.<br>


---

# 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.segment.finance/protocol/stablecoin-s1.md?ask=<question>
```

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.