Guide
What Is a Stablecoin Depeg? When 'Stable' Breaks
Bottom line: the "$1" can break
A depeg is when a stablecoin's price drifts away from the fiat value it's meant to track (e.g. 1 coin = $1).
Key points
- Stablecoins aim for stability, but it isn't guaranteed
- Caused by under-collateralisation, loss of confidence, or algorithmic failure
- Algorithmic types have collapsed badly before
Why it happens
- Backed types: if the issuer lacks sufficient or transparent reserves, fear can trigger selling
- Algorithmic types: the price-stabilising mechanism can fail under stress
What to check
Don't over-trust "stable"
Check what backs the coin and how transparently it's disclosed. Design and issuer credibility — as with regulated yen stablecoins — are key.
Not financial advice
This article is for information only and is not investment advice. Crypto assets are volatile and carry risks including hacking. Do your own research and only use money you can afford to lose.
This article is informational only and is not financial, investment, or trading advice. Prices are reference snapshots and may be outdated. Always do your own research.
