What is a stablecoin depeg?
In plain words
A stablecoin promises to hold one price, usually exactly one dollar. What that is and why is explained in the article what is a stablecoin. A depeg is when it loses that price and breaks away from the dollar. It promised exactly a dollar, but on the market you are given, say, 90 cents for it.
The easiest way to put it is this: there is a ticket that always cost exactly 100 rubles, and suddenly it starts selling for 90. That means something is wrong with it and trust has wavered. The word itself comes from English. Peg is an anchor or a stake, and de-peg is to break free of that anchor.
Why does it matter to you? If you keep savings in a stablecoin, a depeg is a direct risk of losing part of your money. Understanding why it happens is part of your defense.
Deeper
Why a stablecoin breaks free of the peg
Two things hold the peg: real backing, and the belief that the token can be exchanged for the promised dollar at any moment. A depeg starts when one of these gives way, and this happens in three typical situations.
The first is a backing problem. If reserves are suddenly less than needed, or temporarily out of reach, the promise is in question and the price sags.
The second is a run. Even with normal backing, mass panic, when everyone rushes at once to exchange the token back, can push the price down for a while.
The third is a spiral in algorithmic coins. In those whose stability rests not on solid reserves but on an algorithm and trust, a loss of trust triggers a self-reinforcing collapse from which there is often no return.
Two very different depegs
The main thing a beginner should grasp: not all depegs are alike.
The first case is temporary, and the coin recovered. In March 2023 the large stablecoin USDC briefly lost its peg. About 3.3 billion dollars of its cash reserves were locked in the collapsed American bank Silicon Valley Bank. The price sagged below the dollar, but as soon as access to the reserves was confirmed, the peg returned within a few days1. The backing was real, and the trouble turned out to be the temporary unavailability of the money, not its absence.
The second case is fatal, and without return. A year earlier, in May 2022, the algorithmic stablecoin UST broke away and did not recover. Its peg was held not by safe fiat reserves but by an algorithm. UST could always be swapped for a dollar’s worth of its sister coin LUNA and back, and shortly before the crisis a Bitcoin reserve was added to defend the peg as well. When trust wavered, the mechanism turned into a self-reinforcing spiral, ever more LUNA was minted and its price collapsed. The Bitcoin reserve could not hold the peg, and within a few days UST crashed to nearly zero and wiped out about 18 billion dollars2.
The difference between these two cases is the main lesson about depegs. What matters is not whether a break happened, but what stands behind it.
What a depeg means for you
A depeg is possible even for large coins, since big does not mean invulnerable. Look at backing and transparency, which is covered in the article what is a stablecoin. It is real, accessible, and confirmed reserves that let a coin survive a panic. Current prices and deviations are not put into the reference, you look them up in an aggregator.