What is a stablecoin depeg?
A depeg is when a stablecoin trades away from the dollar it's meant to track. Why it happens, how different stablecoins hold their peg, and what to watch.
Updated Nov 17, 2026
In short
A stablecoin is meant to be worth one dollar (or one euro, or whatever it tracks). A depeg is when it trades away from that, usually below. Small, brief moves happen all the time; a real depeg is when confidence in what backs the coin breaks, and holders rush to sell. How likely that is depends on what backs it: cash and bonds held by a company, crypto locked in contracts, or an algorithm.
How stablecoins hold their peg
- Backed by cash and short-term bonds, held by a company that issues and redeems the coin, such as USDC or USDT. The peg rests on the reserves being there and redemptions working.
- Backed by crypto locked in contracts, usually worth more than the stablecoins issued, such as DAI. The peg rests on the collateral and on liquidations working when prices fall.
- Held by a strategy or an algorithm, such as hedged positions or mint-and-burn mechanisms. The peg rests on the design holding up in a stressed market, which some haven't.
Why depegs happen
- Doubts about the reserves: a bank holding them fails, or an audit raises questions.
- A run: many holders want out at once, faster than redemptions can keep up.
- The collateral falls: for crypto-backed coins, a crash can leave the coin under-backed.
- The design breaks: some algorithmic stablecoins have collapsed entirely.
What to watch
- What backs each stablecoin you hold, and who publishes the evidence.
- How much of your money sits in one stablecoin. Spreading across a few limits the damage from any one.
- Where your stablecoins are lent or pooled. A depeg can spread through lending markets and pools that hold the coin.
In Burokku
Every stablecoin you hold, across wallets, exchanges and DeFi positions, counts in one net worth, so you can see how much rests on each one. A concentration alert tells you when one coin becomes too much of your portfolio, and price alerts can warn you if a stablecoin moves away from its peg. See also how to earn yield on stablecoins, and what can go wrong.
Questions
- Is a stablecoin worth exactly one dollar?
- Usually very close, but not exactly, and not always. Its market price depends on buyers and sellers, held near one dollar by the promise that it can be redeemed for one. When people doubt that promise, the price can fall.
- What happens to my loans if a stablecoin depegs?
- It depends which side it's on. If you borrowed against a stablecoin and it falls, your collateral is worth less and your health factor drops. If you borrowed a stablecoin that falls, you owe less in dollar terms. Lending protocols use price feeds, so a depeg can trigger liquidations.