What is a depeg event?

A depeg event is when a stablecoin's market price moves away from the value it is meant to track, such as a dollar-pegged token trading at 95 cents instead of one dollar. Depegs happen when confidence in the backing falters, redemptions are constrained, or reserves are questioned. For example, a stablecoin can briefly drop during a market panic when many holders sell at once. Some depegs recover within hours; others become permanent if the underlying backing is impaired. A depeg signals stress in the peg mechanism.