How a stablecoin depeg is measured
A stablecoin's peg is the price it is designed to hold, almost always one unit of a reference currency. The peg is not a property of the token — it is the outcome of a mechanism, usually redemption at par against reserves or an algorithmic supply adjustment. A depeg is what you see when that mechanism stops being trusted or stops working.
Measuring it is simple: express the gap between the market price and the peg as a percentage. Interpreting it is where the judgement lies. Deviations of a few hundredths of a percent happen constantly and mean nothing — they are the ordinary friction of order books, spreads and arbitrage. A deviation of several percent that persists for hours or days is a different signal entirely.
The word 'stable' describes a design goal, not a property that has been guaranteed to you. Stablecoins have broken their pegs before, sometimes for hours and sometimes permanently, and what separates those two outcomes is the design of the coin and the quality of what backs it. That is worth checking while the peg is holding, because the moment it slips is the worst possible time to start reading.
Worked example
A stablecoin pegged to 1.00 trading at 0.9820, held in a position worth 25,000 at par.
| Input | Value |
|---|
| Peg target | 1.0000 |
| Observed price | 0.9820 |
| Deviation | -1.80% |
| Position value at par | 25,000 |
| Position value at market | 24,550 |
| Mark-to-market gap | 450 |
| Gross redemption arbitrage | 1.83% |
| A routine wobble at 0.9990 | -0.10% |
The last row is the calibration point. A 0.10% deviation is background noise and corrects within minutes. A 1.80% deviation means the market is pricing in real doubt that redemption at par will be honoured — and if redemption were freely available and trusted, arbitrageurs would already have closed a 1.83% gap.
How to use this calculator
- Enter the peg the coin actually targets rather than assuming 1.00 — some are pegged to other currencies, commodities or baskets.
- Use the price from a venue with real depth; a thin pair can print an off-peg price that reflects nothing but a small order.
- Judge the deviation together with how long it has lasted. Duration separates a momentary imbalance from a loss of confidence.
- Check what backs the coin and whether redemption is open to you — many collateralised coins only allow direct redemption for large institutional accounts.
- Apply the deviation to your actual holding to see the real exposure, and remember that stablecoin balances sitting inside DeFi positions are exposed too.
Frequently asked questions
What size of deviation is normal?
Movements of a few basis points — hundredths of a percent — are entirely routine and reflect ordinary spreads and order flow. Sustained deviations beyond roughly half a percent are worth investigating, and anything above a percent that does not close quickly indicates the market doubts the redemption mechanism.
What is the difference between collateralised and algorithmic stablecoins?
A collateralised coin holds reserves — cash, short-term instruments, or over-collateralised crypto — and maintains the peg through redemption against them. An algorithmic coin adjusts supply or relies on a paired token instead of holding equivalent reserves. Algorithmic designs have historically been far more prone to failing completely rather than temporarily.
Why does redemption keep a peg in place?
If anyone can reliably redeem the token for one unit of the reference asset, then buying below the peg is profitable and that buying pushes the price back up. The peg holds because of arbitrage, not because of any rule. When redemption is restricted, paused or doubted, the mechanism that restores the peg simply stops operating.
Can a coin recover from a depeg?
Yes — most historical depegs of well-collateralised coins have resolved within days once reserves were demonstrated. But some have not recovered at all, and the outcome depends on whether the underlying collateral genuinely exists and is accessible. Price alone cannot tell you which case you are looking at.
Is a depeg a buying opportunity?
It is a bet that the mechanism holds, and it should be sized as one. Buying a coin at 0.98 pays out if the peg is restored and loses heavily if it is not. The discount exists precisely because other participants are pricing a real probability of failure, not because they missed something obvious.
How can I judge whether the reserves are real?
Look for regular attestations or audits from a recognised firm, published at a stated frequency, that specify what the reserves actually consist of. A single old report, a vague description of 'cash and equivalents', or no independent verification at all are all reasons to treat the peg as an assertion rather than a fact.
This calculator is an educational tool. Results are estimates based on the inputs you provide and do not constitute financial advice. Verify figures with your bank, broker or a qualified advisor before acting on them.