Stablecoin depeg

A depeg is when a stablecoin that aims to stay at $1 trades clearly below it.

What it means

How well a stablecoin holds $1 depends on what backs it (cash and bonds, crypto collateral or an algorithm), and when confidence drops many holders can sell or redeem at once; some depegged stablecoins came back to $1, others never recovered.

What to watch

What backs the stablecoin, whether the reserve can be checked, and how far and how long the price stays below $1.

How Compass-Alpha uses it

Background only; not used in any figure on Compass-Alpha.