Fiat-collateralized refers to a type of asset or cryptocurrency that is backed by a government-issued currency, known as fiat. This means that for every unit of the asset, there is an equivalent amount of fiat currency held in reserve. This backing provides stability and trust, as the value of the asset is directly tied to the value of the fiat currency, such as the US Dollar or Euro. In this system, users can exchange the fiat-collateralized asset for the underlying fiat currency at any time, ensuring liquidity. This model is often used in stablecoins, which aim to minimize price volatility and provide a reliable medium of exchange in the cryptocurrency market.