How to read a depeg in real time
Depegs are decided in hours. The signals that matter are public, and almost nobody watches them in the right order.
Hour zero: is redemption clearing?
Everything follows from this. If verified redemptions are still settling at par, the discount is a liquidity artefact and mean reversion is the base case. If redemptions are paused or gated, treat the discount as information about the reserves.
Hours one to six: supply and depth
Watch circulating supply and pool depth together. Supply falling with a persistent discount means arbitrage is working through the redemption channel. Supply flat with liquidity being withdrawn means market makers have stopped believing in the recovery.
- Discount persisting past 24h → materially higher terminal risk
- Supply shrinking → redemption channel functional
- Pool depth falling → market makers exiting, not arbitraging
Decide before, not during
Write the rule in advance: the deviation threshold, the persistence window, the venue you exit on and the asset you exit into. Every institution that handled March 2023 well had that document. Every one that panicked did not.