Depeg
Peg & stabilityA sustained, material break from the reference value — not a momentary wick. Usually defined as trading beyond a threshold (commonly 0.5%) for a meaningful period.
A depeg is what happens when peg deviation stops being noise. The market is no longer pricing the token at par because it doubts either the assets behind it or the mechanism that converts the token back into those assets.
Depegs come in two flavours. Liquidity depegs are local: the redemption pipe is intact but the on-chain book is too thin to absorb the flow, and the price recovers once arbitrage catches up. Solvency depegs are terminal: the reserve is impaired or frozen, and no amount of arbitrage capital closes the gap.
Historically the fatal cases share a pattern — an algorithmic or under-collateralised design, or a reserve concentrated in a single counterparty that failed.
Why it matters
Distinguishing a liquidity depeg from a solvency depeg in the first hour is the single highest-value judgement a holder makes.
How to read it
- •Check whether primary redemption is still open — that is the dividing line.
- •Compare the on-chain price to the OTC/issuer price; a wide gap points to liquidity, not solvency.
See it in action
Related terms
How far the market price sits from the token's reference value, in percent. USD.NET computes it as (price − peg target) ÷ peg target.
The right to exchange a token for one unit of the underlying with the issuer, and the conditions attached: eligibility, minimum size, fees and settlement time.
Value of collateral divided by value of outstanding tokens. Fiat-backed designs target ~100%; crypto-backed designs deliberately run well above it.
The size you can trade before moving the price. On USD.NET this is indexed on-chain DEX pool depth containing the asset; centralised order books are not included.