A token depeg occurs when a stablecoin or other pegged cryptocurrency loses its intended value relative to its anchor asset. This deviation signifies a failure in the mechanisms designed to maintain the token’s fixed price. Such events can trigger significant market volatility and erode confidence in the affected digital asset.
Context
The stability of pegged tokens is a critical element for many decentralized finance applications and the broader digital asset market. News frequently reports on events where stablecoins or other pegged assets experience significant price deviations from their intended parity. These occurrences often prompt investigations into the underlying causes, such as reserve adequacy, market manipulation, or protocol flaws.
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