Stablecoins are designed to maintain a consistent 1:1 value with their underlying fiat currency—typically the US dollar. However, market dynamics can occasionally disrupt this balance, leading to what’s known as a depeg. While often misunderstood or oversimplified, a depeg isn't just about price deviation; it's about the scale, volume, and systemic impact of that deviation. Understanding this nuance is crucial for investors, traders, and analysts monitoring crypto market health.
Traditional definitions of depegging focus solely on price—such as when a stablecoin trades below $1. But this approach fails to account for real-world significance. For instance, if TUSD trades at $0.99998, is that truly a meaningful depeg? Probably not. To address this limitation, Riyad Carey of Kaiko Research developed a more sophisticated metric that incorporates trading volume and exchange-specific weightings to measure the true impact of depeg events.
This refined model offers a clearer picture of stablecoin resilience by emphasizing systemically important trading pairs, such as USDC-USDT on Binance, and adjusting sensitivity based on total market activity.
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Establishing a Dynamic Depeg Threshold
Rather than using a fixed price threshold (e.g., $0.99), the new metric defines a volume-adjusted depeg threshold that tightens as a stablecoin’s trading volume increases. The logic is straightforward: the larger the volume, the greater the financial impact of even minor deviations.
For example:
- A stablecoin with $10 billion in monthly volume trading at $0.995 represents a far more significant economic event than one with $10 million in volume at the same discount.
- High-volume stablecoins like USDT and USDC are held to stricter thresholds because their widespread use amplifies the consequences of instability.
Using this framework, notable depeg events in 2025 include:
- USDC and DAI on March 12
- TUSD on June 12
- USDT on August 7
These weren’t just minor fluctuations—they represented meaningful departures from parity across major trading venues, validated through weighted volume analysis.
Binance’s role in shaping these dynamics cannot be overstated. When the exchange removed fees for BTC-TUSD trades, TUSD’s trading volume surged, causing its depeg threshold to tighten rapidly between February and March. Conversely, BUSD’s threshold widened—from $0.998 to $0.9955—as its overall volume declined amid regulatory pressure and its impending NYDFS-mandated phaseout.
USDT maintained the narrowest threshold throughout the year, staying above $0.998 even during periods of reduced liquidity—an indication of its entrenched market position despite growing scrutiny over Tether’s redemption policies.
Volume Weighting: Why Trading Pairs Matter
Not all trading pairs are created equal. To assess which exchanges and instruments most influence a stablecoin’s peg, a volume-weighted scoring system was implemented. This method assigns higher importance to pairs that dominate a stablecoin’s trading activity.
Key insights from year-to-date stablecoin-stablecoin trading volumes:
- DAI: $17 billion total volume, with ~$13 billion concentrated on Uniswap V3 and Curve.
- TUSD: $24.5 billion total, nearly $23.5 billion from a single pair—TUSD-USDT on Binance—giving it a 95% weighting in TUSD’s dataset.
- BUSD: $97.5 billion total, $93 billion from BUSD-USDT on Binance.
- USDC: $150 billion across 48 instruments, indicating broader distribution.
- USDT: $320 billion spread over 75 instruments—the most diversified and dominant player.
This weighting reveals critical truths about peg stability. For instance, Uniswap V2 showed high “depeg hours” for USDC—but due to low overall volume contribution, it had minimal systemic impact. In contrast, Binance recorded fewer depeg hours but ranked second in weighted depeg hours due to massive trading volume.
👉 See how top-tier exchanges influence stablecoin performance in live markets.
To ensure accuracy, any instrument contributing less than 0.01% of a stablecoin’s volume was excluded—removing 15 minor pairs from USDC’s dataset alone.
Interpreting Depeg Severity: From Hours to Magnitude
The metric allows for flexible analysis depending on time granularity:
- Hourly data captures acute stress events.
- Daily data provides a smoother view of sustained instability.
In early August, hourly analysis revealed severe USDT depegs reaching 98% depeg severity—meaning USDT traded below its threshold across nearly all major instruments simultaneously. This occurred after $500 million in net selling across Binance, Huobi, and Uniswap within days.
Despite the scale, the event didn’t make headlines because the price dip wasn’t dramatic in absolute terms. However, the breadth of the depeg signaled deep market stress.
A daily view highlights another major incident: TUSD on June 7, which reached nearly 60% depeg severity as it traded below parity on its primary Binance pair for most of the day.
To simplify interpretation, depeg severity is expressed in magnitudes, where magnitude = severity (%) ÷ 10:
- June 7 TUSD depeg → Magnitude 6
- August 7 USDT depeg → Magnitude 4
- Preceding USDT movement on August 5 → Magnitude 2 (foreshock)
- Subsequent ripples → Magnitude 1 aftershocks
Like earthquakes, depegs under magnitude 2.5 are rarely impactful. Notably, USDC, BUSD, and DAI have not recorded a magnitude 1+ depeg in over four months, underscoring their relative stability.
Exchange-Level Impact on Stablecoin Stability
Which platforms contribute most to depeg events?
- During the March market turmoil, USDT depegged primarily on Uniswap V3 and Curve, not Binance—highlighting decentralized exchanges’ vulnerability during volatility.
- June was turbulent for both TUSD and USDT, with Binance playing a central role.
- In July and August, Bitforex accounted for nearly all weighted depeg hours for USDC, suggesting localized liquidity issues rather than systemic failure.
Despite regulatory headwinds—including the SEC lawsuit involving Binance.US—platforms like Binance have maintained strong peg integrity for major stablecoins, thanks to deep liquidity and rapid arbitrage mechanisms.
Meanwhile, BUSD has remained remarkably stable throughout 2025, defying expectations given its scheduled retirement. This resilience reflects deliberate liquidity management and reduced speculative trading activity.
Frequently Asked Questions (FAQ)
Q: What exactly is a depeg?
A: A depeg occurs when a stablecoin’s market price deviates significantly from its intended peg—usually $1 USD. It reflects temporary loss of confidence or liquidity imbalances.
Q: Is every price dip below $1 considered a depeg?
A: Not necessarily. Minor deviations (e.g., $0.9999) are normal. A true depeg involves sustained movement below a volume-adjusted threshold that reflects systemic impact.
Q: Why does trading volume matter in measuring depegs?
A: Volume determines economic significance. A small coin dipping below $1 affects few people; a top-tier stablecoin doing so can ripple across markets.
Q: Which stablecoin had the worst depeg in 2025?
A: TUSD’s June 7 event reached magnitude 6—the highest severity recorded—driven by its concentration on Binance and sudden demand shifts.
Q: Can stablecoins recover from a depeg?
A: Yes. Most recover quickly through arbitrage, issuer interventions, or renewed demand. However, repeated or severe depegs may erode long-term trust.
Q: How can I monitor real-time depeg risks?
A: Track volume-weighted price feeds across major exchanges and watch for net outflows or declining liquidity on key pairs.
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