I heard once again about depegs and decided to figure out what it’s all about. Turns out, it’s simpler than it seems.

A depeg is essentially a detachment. Stablecoins like Tether promise to maintain a $1 peg because they are supposedly backed by real dollars in the company's accounts. But if the company suddenly can’t handle it or something serious happens, this token can detach from the dollar and go into free float. That’s what’s called a depeg.

There are plenty of examples. I remember in 2022, the entire crypto world was talking about UST from Terraform Labs — an algorithmic stablecoin that simply collapsed and took the entire Terra ecosystem down with it. This was a classic case of a depeg, where the token lost its dollar peg and plummeted.

Then, in March 2023, something happened that many thought was impossible — even BUSD and USDC started deviating from the 1:1 parity. The wave of FUD was so strong that even supposedly reliable stablecoins temporarily lost their stability. It was strange and a bit frightening for many.

Honestly, in 2023, it became clear that issues with depegs started affecting not just experimental projects. Even leading stablecoins on the market showed that their stability could be in question. This made many rethink how much they can really trust these tokens in stressful situations.