Stablecoins are designed to track a target value (often $1). But market stress, liquidity gaps, or underlying issues can cause a temporary or permanent “depeg”.
Depeg causes (high level)
- Liquidity problems: not enough buyers when the market shakes.
- Collateral uncertainty: investors doubt the backing.
- Operational events: freezes, delays, or contract issues.
Beginner risk reduction
Diversify stablecoin usage, avoid excessive leverage, and be careful with yield strategies that promise “high returns” without clear risk explanations.
Practical rule
If the reward sounds too smooth, check what can break in the mechanism—not just in the marketing.
Not financial advice.
