Depeg
market · risk
A depeg occurs when a pegged asset such as a stablecoin trades materially away from its intended reference price.
- Also known as
- Lose the peg
1.concept
A depeg occurs when a pegged asset trades above or below its intended reference price for long enough to matter to users and protocols. Causes include liquidity shortfalls, collateral stress, redemption delays, oracle failures, or market panic.
2.risk
Depegs can cascade across DeFi where the asset is used as collateral. Risk controls include circuit breakers, redemption queues, and diversified collateral.
Related terms
All terms and definitions may update as the Cryptionary improves.