Depeg

A depeg is when an asset designed to hold a fixed reference value trades away from that target, such as a stablecoin moving off its $1 peg. The term also appears outside crypto to describe a currency breaking a managed exchange-rate peg, but in onchain markets it usually refers to stablecoins, tokenized deposits, and other pegged instruments.

How it works

A pegged asset maintains its value through a backing mechanism. Fiat-backed stablecoins hold reserves that can be redeemed one-for-one, so arbitrageurs buy the token below par and redeem it for the reference asset, pushing the price back toward the target. Collateralized and algorithmic designs use overcollateralization, mint-and-burn incentives, or on-chain liquidity to defend the peg.

A depeg occurs when that mechanism stops clearing. Redemption may be paused or delayed, reserves may be doubted, collateral may fall faster than it can be liquidated, or liquidity may thin out so that trades move the market price. The gap between market price and the reference value is the measure of the depeg, and it can be brief or persistent.

What the data shows

Reliable supply figures matter when assessing peg stability, because raw totals can overstate how much value actually backs circulating tokens. According to Allium data, October 19, 2026, adjusted onchain stablecoin supply stood at $304.23B versus $333.83B raw, with the $29.6B gap attributable to bridged double-counting. Measuring the true backing requires removing that overlap.

Why it matters

For an institutional reader, a depeg is a direct source of mark-to-market loss, settlement risk, and collateral shortfalls, since a token assumed to equal its reference value may not clear at that value when it is needed. Positions sized against a pegged asset, including treasury holdings and lending collateral, carry exposure to the backing mechanism behind the peg. For a closer look at the dynamics, see Stablecoin Depeg: Why a Dollar Slips Off a Dollar.

Related terms

• Stablecoin
• Reserve backing
• Redemption arbitrage
• Overcollateralization
• Peg stability

Frequently asked questions

What is a depeg?

A depeg is when an asset built to hold a fixed reference value, such as a $1 stablecoin, trades away from that target. The size of the gap between market price and reference value measures the depeg.

What causes a stablecoin to depeg?

Common causes include paused or delayed redemptions, doubts about reserves, collateral falling faster than it can be liquidated, and thin liquidity that lets trades move the market price away from the target.

Is a depeg always permanent?

No. A depeg can be brief or persistent. If the backing mechanism resumes clearing, through redemption or arbitrage, the price can return toward the target. A sustained gap reflects an ongoing failure of that mechanism.

Allium provides onchain data infrastructure. Companies named in this article may be Allium customers, prospects or commercial counterparties. The authors and other Allium personnel may hold positions in the assets discussed. This article is informational only and is not investment, legal or tax advice. Data and information last reviewed: October 19, 2026.