What Is a ‘De-Pegging’ Event and What Are Its Consequences?

A de-pegging event occurs when a stablecoin's market price significantly deviates from its intended fixed value, typically $1. Consequences include a loss of user confidence, massive withdrawals or redemptions, and potential systemic risk to the broader DeFi ecosystem that relies on the stablecoin.

For the issuer or protocol, it can lead to a complete collapse of the system and significant financial losses for holders.