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Stablecoin depegs: a complete history + how to track the next one
A stablecoin is only "stable" until it isn't. The last few years gave the market a hard lesson: a coin pinned to $1 can drift, wobble, or collapse entirely — sometimes in hours. This is the canonical history of stablecoin depegs, why pegs break, and how to catch the next one before it hits the headlines.
The canonical depeg timeline
Most depegs fall into one of two buckets: a brief wobble that recovers, or a death spiral that doesn't. History gives us textbook examples of both.
- TerraUSD (UST) — May 2022. The defining catastrophe. UST was an algorithmic stablecoin that held its peg via an arbitrage loop with its sister token, LUNA. When confidence cracked and large redemptions hit, the mechanism turned reflexive: falling UST minted ever-more LUNA, LUNA's price collapsed, and the loop fed on itself. UST detached from $1 and never recovered, erasing tens of billions of dollars in value across the ecosystem.
- USDC — March 2023. A different failure mode. USDC is fiat-backed, but a portion of its reserves sat at Silicon Valley Bank, which collapsed over a weekend. Markets panicked over reserve access and USDC briefly fell to roughly $0.87. Crucially, the reserves were real — once it was clear funds were safe, USDC reclaimed its $1 peg within days. A wobble, not a spiral.
- Smaller algorithmic failures. UST was not unique. A string of under-collateralized and algorithmic designs — coins relying on a partner token, a rebase, or pure incentives rather than hard reserves — have depegged and stayed broken, trading at cents on the dollar. They share UST's fatal trait: nothing forces the price back to $1 when faith runs out.
Why pegs break
Strip away the specifics and depegs come from three root causes — often stacking on top of each other:
- Loss of reserves or confidence. If holders doubt the assets backing a coin (or doubt they can access them), they redeem. The USDC/SVB scare was a confidence shock to genuinely solvent reserves.
- Liquidity crunch. Even a well-backed coin can slip if there isn't enough buy-side depth on exchanges to absorb a rush of sellers. Thin liquidity turns a small imbalance into a visible price gap.
- Algorithmic reflexivity. The most dangerous. When a peg depends on a second token instead of hard collateral, a falling price can trigger more selling, which lowers the price further — a self-reinforcing loop. This is the death-spiral mechanic that killed UST.
The line between a wobble and a spiral is whether something credible pulls the price back: real, accessible reserves and arbitrageurs who profit from buying the discount. When that backstop exists, deviations heal. When it doesn't, they compound.
From history to live monitoring
Every collapse above showed up first as a number — a price drifting off $1 — well before the news cycle caught up. That's the entire case for watching peg deviation continuously instead of reading about it after the fact.
foXLabs publishes Stablecoins Monitor on Apify — built on DefiLlama's free stablecoins API:
- 380+ stablecoins with price, circulating supply, growth, peg deviation, mechanism and dominant chain.
- Run a depeg hunt by sorting on peg deviation — the same signal that flagged UST and USDC early — to surface coins drifting off $1 right now.
- No API key, no proxy — export JSON/CSV/Excel and schedule a daily peg-deviation feed.
Catch the next depeg early. Peg deviation across 380+ stablecoins, sorted to surface drift before the headlines — as clean CSV/Excel.
Run Stablecoins Monitor on Apify →Frequently asked questions
What is the biggest stablecoin depeg in history?
The collapse of TerraUSD (UST) in May 2022. As an algorithmic coin tied to LUNA, it lost its $1 peg, entered a death spiral, and wiped out tens of billions of dollars in days — and never recovered.
Why do stablecoins depeg?
Three core reasons: loss of confidence in the coin's reserves, a liquidity crunch with too little buy-side depth, or — for algorithmic coins — reflexive feedback where a falling price triggers more selling. A brief wobble recovers; a death spiral doesn't.
How can I monitor stablecoin depegs?
Sort by peg deviation. The Stablecoins Monitor actor reports peg deviation across 380+ coins, so you can schedule a daily feed and surface any stablecoin drifting off $1 as soon as it starts — exported to CSV, JSON or Excel.