Depeg
When an asset meant to track a fixed value, like a stablecoin's $1, slips away and won't snap back.
A depeg is when a pegged asset loses its peg. Stablecoins are supposed to hold $1, and wrapped or staked tokens are meant to mirror the asset they represent. When confidence cracks or reserves look shaky, traders sell and the price breaks below par.
Some depegs are brief wobbles; others are fatal. TerraUSD, an algorithmic stablecoin, fell from $1 to near zero in May 2022 and erased about $40 billion. Even backed coins slip. USDC dipped to $0.87 in March 2023 when part of its reserves was stuck in a failed bank.
Related terms
A crypto token designed to hold a steady value, almost always pegged one-to-one with the US dollar.
Algorithmic StablecoinA stablecoin that holds its peg through code and market incentives rather than holding cash reserves — a fragile design.
Liquid StakingStaking tokens while receiving a tradable receipt token, so your capital keeps earning rewards without being locked up.
Wrapped TokenA token that represents another asset one-to-one on a different chain, letting it move where it natively cannot.