Depeg

A depeg happens when a stablecoin or pegged asset drifts away from the value it's supposed to track, usually $1. Readers care because stablecoins are meant to be the boring, stable part of crypto, and a depeg can wipe out savings fast or signal deeper trouble at the issuer. In May 2022, TerraUSD (UST) fell from $1 to a few cents within days as its algorithmic backing collapsed, dragging its sister token Luna down with it. Smaller depegs happen too: USDC briefly dropped to about $0.87 in March 2023 after news that some of its reserves sat at the failed Silicon Valley Bank, then recovered once regulators guaranteed deposits.