What are the biggest stablecoin depegs in history?
The largest by dollar impact remains TerraUSD (UST), which collapsed from $1.00 to fractions of a cent in May 2022, erasing roughly $40B of combined UST and LUNA value in days. The deepest depeg of a still-surviving major fiat-backed token was USDC's fall to about $0.88 in March 2023, which fully recovered. A running, dated log of these and other events is maintained at /depegs/history.
TerraUSD (UST) — May 2022, the terminal case
UST was an algorithmic stablecoin that maintained its peg through a mint-and-burn arbitrage with its sister token LUNA, rather than holding dollar reserves. When large withdrawals from the Anchor Protocol savings product triggered selling pressure that outpaced the arbitrage mechanism, the peg broke on 9 May 2022. The defence mechanism itself accelerated the collapse — burning UST minted enormous quantities of LUNA, hyperinflating its supply and crashing its price, which destroyed the very backstop meant to restore the peg. Within about a week, UST traded near $0.01 and LUNA lost effectively all its value, a combined destruction of roughly $40B.
USDC — March 2023, the recoverable case
USDC fell to roughly $0.88 over the weekend of 11-12 March 2023 after Circle disclosed that $3.3B of its reserves were held at the failed Silicon Valley Bank. Because the underlying Treasury and cash assets were never actually impaired — and the FDIC guaranteed SVB depositors within days — USDC recovered to $1.00 by 13 March. This is the clearest real-world example of a liquidity depeg versus a solvency depeg.
USDT — May 2022, the shallow case
During the same Terra-driven panic, USDT briefly traded down to around $0.95 on some venues as contagion fears spread across the whole stablecoin sector. Tether continued processing large institutional redemptions throughout, and the price recovered within days — a shallow, liquidity-driven depeg rather than a reserve problem.
Smaller but instructive cases
Other notable events include Iron Finance's IRON stablecoin collapsing in June 2021 in what became known as a 'bank run' on a partially algorithmic design, and DAI's spike to roughly $1.11 in March 2020 during 'Black Thursday' due to failed liquidation auctions rather than a run. Each case fits one of two categories: liquidity dislocation that resolved, or a structural flaw in the peg mechanism that didn't. The full, continuously updated list with dates and depth lives at /depegs/history.
Frequently asked
- What was the single largest stablecoin depeg?
- TerraUSD (UST) in May 2022, which collapsed from $1.00 to near zero and, combined with LUNA, destroyed roughly $40B of value.
- Has a fully reserved fiat-backed stablecoin ever failed permanently?
- Not among the major tokens to date. USDC and USDT have both had sharp depegs but recovered because their underlying assets remained intact.
- Where can I track depeg history in detail?
- The permanent archive at /depegs/history logs major events with exact dates, depth and recovery timelines.
- Do algorithmic stablecoins depeg more often than fiat-backed ones?
- Historically yes, and more severely — their peg depends on market confidence and a secondary token rather than held reserves, which makes the failure mode reflexive and fast-moving.