Recently, I saw many people discussing the concept of depeg in the community. Essentially, it refers to the situation where a stablecoin falls below its pegged price. This term has become so popular mainly because USDC and DAI experienced such awkward situations a few years ago.

Do you remember back then? USDC lost investor confidence almost overnight after part of its reserves were frozen in a bank that went bankrupt. Panic spread quickly, and even some major exchanges had to suspend trading pairs related to it. This directly exposed a phenomenon: even stablecoins claiming to be 100% backed by USD can face depeg risks immediately if their reserves encounter issues.

DAI’s experience was also quite typical. Although it is mainly backed by crypto assets, since some of its reserves depend on USDC, when USDC had problems, DAI also dropped in value. During that period, watching the stablecoin’s price hover around 0.9 really made many people rethink the security of stablecoins.

These depeg events actually teach us a lesson: stablecoins may seem stable, but if their reserve mechanisms have vulnerabilities, even high credibility can’t prevent market panic. So now, when making investment decisions, I pay more attention to the composition and transparency of a project’s reserves. After all, in the crypto market, understanding what backs your assets is really important.