Trading term

What is Depeg (stablecoin)?

A depeg is a stablecoin trading well outside its normal band against the currency it is supposed to match — in practice, more than 1% from a dollar on an exchange with a real dollar leg. Tether's normal band is about ten basis points either side of $1; a depeg is the handful of hours in nine years when it, or USDC, traded at $0.85, $0.92 or $0.87.

A stablecoin's peg is held by arbitrage, not by the issuer's promise. Anyone who can use the issuer's redemption window buys the coin below a dollar and redeems it, or mints it at a dollar and sells it above, and their trading keeps the exchange price within a few basis points of par. A depeg is what the price does when that arbitrage stops: when the window is in doubt, closed for the weekend, or too small and slow for the amount trying to get through it. The price then becomes the price of getting out through the market, and it can fall a long way in an hour.

The record has three. On 15 October 2018 Tether traded at $0.85 on Kraken at 06:00 UTC after a fortnight's slide, spent 18 hours below $0.95 and took nine weeks to close a week back within 25 bp of a dollar — the doubt was about the reserves, and nothing could settle it quickly. On 12 May 2022, as TerraUSD collapsed, Tether traded at $0.92 on Kraken and $0.941 on Coinbase in the same hour, and was back above $0.99 five hours after its worst hourly close. On 11 March 2023 USDC traded at $0.874 on Kraken after $3.3bn of its reserves were caught in Silicon Valley Bank; it closed 16 hours below $0.95, and its first hourly close back above $0.99 landed in the 22:00 UTC hour on Sunday, when the Fed and the Treasury guaranteed the bank's deposits.

A depeg is also a rotation. Money leaving one stablecoin goes into the next, so while USDC traded at $0.87, Tether traded at $1.027 on Coinbase; while Tether traded at $0.92, USDC traded at 1.05 USDT on Binance. One coin at a discount with its rivals at par is a run on that coin. Every coin at a discount together is a run on the venue's dollar.

For example

You hold $1,000,000 of USDC on an exchange at noon UTC on 11 March 2023. Kraken's hourly close is $0.901, so a sale there raises $901,000: a $99,000 haircut for getting out that hour. Thirty-four hours later the same coins sell for $990,000 or more, and Circle redeemed them for $1,000,000 throughout. The depeg was the price of the hours, not of the coins.

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Why it matters to you

Everything on an offshore exchange is priced in a stablecoin, and every position on a perpetual is collateralised in one. A depeg reprices all of it at once, and a leveraged position that looked safe in Tether can be liquidated by Tether. Knowing the normal band — ten basis points — is what lets you tell a Tuesday from a break.

⚠ Reading a few basis points as a depeg

Tether has closed a day within ±10 bp of a dollar on about nine days in ten since May 2021 and has never closed a day more than 1% away. A reading of $0.9994 is not a depeg; it is a market with more sellers than buyers of the coin that day, and Tether sat there for most of 2026. A depeg is a percent or more, on a venue with a real dollar leg, and it announces itself.

Frequently asked questions

What is a stablecoin depeg?

A stablecoin trading well outside its normal band against a dollar, in practice more than 1% away, because the arbitrage that normally holds the price has stopped. Since 2017 there have been three on venues with a real dollar leg: Tether to $0.85 in October 2018, Tether to $0.92 in May 2022, and USDC to $0.874 in March 2023.

How long does a depeg last?

It depends on what closed the redemption window. Tether's 2018 discount, caused by doubt about its reserves, took nine weeks to close back within 25 bp of a dollar. Its 2022 scare lasted six hourly closes below $0.99. USDC's 2023 break ended 34 hours after its worst hourly close, in the hour the Fed and the Treasury guaranteed Silicon Valley Bank's deposits.

Does a depeg mean the stablecoin is insolvent?

Not by itself. In every episode here except TerraUSD's collapse, the issuer redeemed at a dollar throughout; the exchange price fell because sellers could not reach the window fast enough, or doubted it. TerraUSD was different: it had no dollar reserves to redeem against, and it went from $0.99 to $0.25 on Binance in a week.

Read the full guide

DerivativesHow to Read the Stablecoin PegA stablecoin's peg is its exchange price against a dollar. Nine years of weekly Kraken closes and five of daily Coinbase closes say the normal band is ten basis points, that the peg leans a few basis points the way the crowd is running, and that it has broken for hours, not weeks — Tether to $0.85 in 2018 and $0.92 in 2022, USDC to $0.87 in 2023 — with the loser's discount showing up as the winner's premium every time.11 min read

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