What is depeg?

The short answer

A stablecoin promises to hold a reference value, one dollar for most of them. A depeg is a sustained departure of the market price from that value. Brief wiggles happen in normal trading. The word depeg reserves itself for departures that last and that people act on. The dated cases live in this site’s register.

The definition, sourced and dated

The definition wording is this site’s own. Both of its definition-tier sources use the term in exactly this sense. The primary record is an issuer page titled Dollar De-peg Closes, Circle’s pressroom statement of 13 March 2023, datelined 12 March, read 11 September 2026 ^[1]. When an issuer titles a page about a depeg closing, the word is doing contractual work in the primary record. It is not floating in commentary.

The sustained qualifier carries weight. Every liquid market drifts a few tenths of a percent around its reference. Calling each drift a depeg would empty the word. The cases that earned the name, in this site’s register, lasted hours to days. They moved whole percentage points.

The mechanism, why pegs hold at all

A fiat stablecoin’s peg is maintained by backing and redemption. The issuer’s developer documentation states the design plainly. USDC is a digital dollar issued by Circle, backed 100 percent by highly liquid cash and cash-equivalent assets so that it is always redeemable 1:1 for USD ^[2]. The pressroom record adds the regulatory phrasing from the same week. As a regulated payment token, USDC remains redeemable 1:1 with the US dollar ^[1].

Redemption is the repair channel. If the token trades below one dollar, a holder who can redeem at the issuer for one dollar captures the gap. So can one who buys below and redeems at par. Arbitrage of that kind pulls the price back toward the peg. It works while redemption works and while the backing is believed. Both conditions are observable in the case record. That is why every case below turns on one of them.

Belief is the load-bearing word. A peg is a promise backed by assets people can inspect. When a reserve’s safety is questioned, the price moves first and the inspection follows. The reserve ratio term covers how the backing gets counted, attested, and dated.

Three dated anchor cases

The USDC case of March 2023 is the definition’s worked example. On 10 March 2023 the issuer announced that 3.3 billion dollars of reserves, about 8 percent of the total, was stuck at a failed bank. The token traded down until the joint federal announcement of 12 to 13 March. After that, the issuer titled its record Dollar De-peg Closes ^[1]. Redemption never broke. The backing was questioned and then defended.

Terra’s UST broke on 7 May 2022 and was lost for good on 10 May. Value destroyed across UST and LUNA was measured at 40 to 50 billion dollars, a range by measurement. FDUSD dropped on 2 April 2025 after a public insolvency allegation against its reserve operator. Both cases are carried in full by this site’s depeg register, with every depth figure attributed to its feed, venue, or pair. This page defines the word. The register holds the numbers, and its rows are the only place they are reprinted.

What a depeg is not

A depeg is not a collapse, though one can precede the other. UST’s case ended in a collapse-class wind-down. The USDC case closed in days with redemption intact. Lumping them hides the difference a reader needs. Nor is a depeg a prediction input. The register records what happened. Nothing on this site converts a case into a forecast about an issuer.

What does depeg mean?

A sustained departure of a stablecoin’s market price from the reference value it promises to hold, one dollar for dollar-referenced tokens. The primary record of the March 2023 USDC episode is an issuer page titled Dollar De-peg Closes. It uses the word in exactly this sense.

When did UST depeg?

The peg broke on the night of 7 May 2022. It was lost for good on 10 May 2022. The depeg register carries the dated rows, the attributed depths, and the two causal theses.

What caused the USDC depeg in March 2023?

A bank failure touching the reserve, not a token design fault. 3.3 billion dollars of reserves, about 8 percent, sat at Silicon Valley Bank when it failed on 10 March 2023. The register’s USDC section carries the attributed trough readings and the recovery timeline.

If USDT crashes, what happens to other stablecoins?

No documented case exists, and this site does not predict. The closest documented event is the March 2023 contagion. Other tokens traded off their pegs during the USDC episode with no direct exposure of their own. The register records that row, attributed and dated. It converts to no forecast.

Where this term sits

The cryptocurrency hub frames the cluster. The sibling terms custody and reserve ratio mark what a depeg stress-tests. Where the keys are, and what backs the token. Every claim above carries its source and date.