Depeg

A depeg occurs when an asset that is meant to track a reference value, such as a stablecoin targeting one US dollar, trades meaningfully away from that target. Depegs can be brief or prolonged and may result from reserve concerns, redemption problems, thin liquidity, technical failures, or a loss of market confidence. In some cases the price recovers; in others it does not.

A common misconception is that a stablecoin can never lose its peg; the target is a design goal maintained by mechanisms that can fail under stress. This entry describes mechanics only and is not financial advice.