Stablecoins: Types & Depeg Risk
The dollar you hold on-chain is a promise, not cash — and promises can break. Knowing what backs each stablecoin is risk management.
Almost every crypto trade quotes, settles, or holds collateral in a stablecoin — a token designed to stay worth one dollar. The entire system runs on a quiet assumption: that one USDC equals one USDT equals one real dollar. That assumption is wrong in two ways. It fails by a few cents on a normal trading day, and it fails catastrophically — by tens of cents or to near zero — during stress. Both failure modes can wipe out an unhedged position. A depeg is when a stablecoin loses that one-dollar anchor, and understanding why it happens is core risk management, not trivia.
The dollar peg is a promise, and promises differ
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