Glossary
Depeg
When a stablecoin or pegged asset loses its target price and trades meaningfully away from it — a signal that the mechanism holding the peg has come under stress.
A depeg is what happens when a stablecoin or other pegged asset stops trading at the value it is designed to hold — usually 1 USD — and drifts to a discount or premium that the market will not immediately arbitrage away. A brief dip to $0.998 is noise; a slide to $0.90 that persists is a depeg, and it tells you the mechanism defending the peg is under real stress.
Depegs come in two flavors. Some are temporary liquidity shocks that snap back once confidence returns — USDC touched $0.87 in March 2023 after Silicon Valley Bank froze part of its reserves, then recovered within days. Others are terminal: UST collapsed to near zero in May 2022 when its algorithmic mint-and-burn loop unwound and never recovered. Watching how an asset behaves during a depeg is the sharpest test of whether its collateral, redemption path, and arbitrage incentives actually work under pressure.