It's a synthetic fiat. Kollider offers options contracts. So by paying $100 BTC to short $100 worth of a BTC/USD "perpetual swap" position at 1:1, you essentially have a (relatively) stable USD. When the BTC/USD value goes up your short position loses value but the BTC goes up at the same rate. At any point in time your position should be worth around $100.

There was a post earlier in the year where Kollider explains these:

Synthetic Stablecoins on Lightning #12413 https://nitter.it/kollider_trade/status/1496507594214723590

This is not without risk, as Kollider is custodian, firstly (not your keys, not your coins), and there's volatility risk -- where either a price spike or a selloff is so brisk where your position is out of balance due to reasons that happen in times of wild volatility, and your short position gets closed. That would be bad.

Or, if Kollider is hacked or otherwise exploited. This would be relevant reading, on that topic:

The Kollider Exchange, Two Attacks Later #43096 https://notgeld.medium.com/the-kollider-exchange-two-attacks-later-225d4e88e579

Also,Kollider is (currently) what StandardSats uses to offer their synthetic stable as well.

StandardSats SBW -- LN wallet with Fiat-denominated custodial channels -- now available on Google Play #37578 https://play.google.com/store/apps/details?id=com.btcontract.walletfiat

What is the Lightning Network? Lightning-native synthetic assets #16742 https://standardsats.github.io

It protects you from exchange rate risk. just like a stablecoin does.

Like if you need to hold a part of your paycheck so that you have at least $1,000 at the beginning of next month for rent, regardless if bitcoin sees a selloff before then. So you buy (peg ?) this USD, then at the first of next month when rent is due, you sell (unpeg ?) and you have $1,000 worth of bitcoin to spend at that time. If your landlord wants cash, you still have to sell the BTC or do whatever you normally do to get cash for your bitcoin.