How does a Hop token hold its peg with its native counterpart (e.g 1hUSDC = USDC)?

As mentioned previously, every Hop token minted on a L2 network is collateralised 1:1. The collateral is locked in the Hop bridge contract on L1.

For example, if you have 1 hUSDC, 1 USDC is locked in the Bridge Contract on Ethereum mainnet. You can always redeem your 1 hUSDC at a 1:1 ratio in the convert section if you choose the “via Hop Bridge” in the Convert section.