Stablecoin Depeg
When a stablecoin trades away from its $1 promise — from routine wobble to death spiral, the stress test that reveals design.
A depeg is a stablecoin trading meaningfully off its target. Severity spans a spectrum: cents-level wobbles that arbitrage closes (USDC’s brief $0.87 dip during the March 2023 banking scare recovered in days) versus structural collapse — TerraUSD’s 2022 death spiral erased ~$40B and its “algorithmic” design class with it.
Reading a depeg: is redemption at $1 still functioning (design intact, panic pricing) or impaired (insolvency)? Reserve-backed coins with clean, attested collateral historically snap back; unbacked or reflexively-backed ones don’t. The 2026 regulatory push (the GENIUS Act’s reserve and disclosure rules) exists precisely to make the second category rarer.