"Fiat-collateralized" refers to a financial arrangement where a stable asset, typically a government-issued currency like the U.S. dollar, is used as collateral to back another asset or financial product. This means that for every unit of the new asset created, there is an equivalent amount of fiat currency held in reserve, ensuring its value remains stable and trustworthy. This concept is often seen in the world of cryptocurrencies, where stablecoins are designed to maintain a fixed value relative to a fiat currency. For example, a stablecoin like Tether is backed by reserves of USD, providing users with a digital asset that minimizes volatility while still being linked to traditional money.