Why Is a Spread Deviation from the Peg a Concern for Stablecoin Holders?

A deviation, or 'de-peg,' indicates a loss of confidence in the stablecoin's ability to maintain its value. A wide spread around the peg means that holders cannot exit their position near the expected value without incurring a significant loss.

This signals potential instability, which can trigger a bank-run scenario and further destabilize the peg.