TL;DR
A stablecoin “depeg” is any event where the market price of a stablecoin diverges materially and persistently from its target — typically $1. Between 2020 and 2026, five depeg events are particularly informative: MakerDAO’s Black Thursday (March 2020), TerraUSD’s collapse (May 2022), USDC’s Silicon Valley Bank weekend (March 2023), USDe’s funding-rate flash (late 2024), and several smaller dollar-pegged failures. Each event was caused by a different mechanism, and each forced changes in how the market designs and stress-tests new stablecoins.
Black Thursday: MakerDAO, March 12-13, 2020
The first major depeg of the modern era hit DAI, not because of DAI’s design directly, but because of a collateral cascade. On 12 March 2020, ETH dropped over 30 % intraday. Ethereum gas prices spiked, causing the Maker oracle price feeds to lag, and the system’s liquidation auctions failed to attract bidders. Many CDPs (the predecessor of Vaults) were liquidated for zero DAI — the auctioneers paid no DAI to recover the collateral. This generated approximately $4 million of protocol debt and pushed DAI’s price as high as $1.12 as liquidated users scrambled to buy DAI to close their positions.
Maker’s response was a debt auction of newly-minted MKR (the governance token), absorbing the loss but diluting holders. The post-mortem drove three durable changes: the introduction of the Peg Stability Module enabling 1:1 USDC↔DAI swaps, the deployment of multi-collateral DAI with explicit liquidation ratios, and the broader adoption of “safety modules” across DeFi protocols.
TerraUSD: the algorithmic collapse, May 2022
Terra’s UST and its share token LUNA were the largest test — and ultimate disproof — of the pure algorithmic stablecoin design. UST maintained its peg through an arbitrage with LUNA: 1 UST could always be burned for $1 worth of newly-minted LUNA, and vice versa. When UST started trading below peg in early May 2022, the arbitrage worked as designed: arbitrageurs burned UST and minted LUNA. But as more UST was burned, more LUNA was minted, supply ballooned, LUNA’s price collapsed, and the death spiral became self-reinforcing.
In approximately 72 hours, UST went from $1.00 to less than $0.10. LUNA went from roughly $80 to fractions of a cent. The Anchor Protocol, which had been paying 19.5 % yield on UST deposits and held over $14 billion in UST, was effectively zeroed. Roughly $50 billion of nominal value evaporated; tens of thousands of retail investors were wiped out. The collateral cascade also took down 3AC, Voyager, Celsius and others over the following weeks.
The TerraUSD event ended pure algorithmic stablecoins as a viable category. Every algorithmic design that has launched since 2022 either includes substantial external collateral (effectively making it crypto-backed or hybrid) or operates at scale too small for the death-spiral dynamics to matter.
USDC’s SVB weekend, March 10-13, 2023
On Friday 10 March 2023, US regulators closed Silicon Valley Bank. Circle disclosed late on Friday night that approximately $3.3 billion of USDC reserves — out of roughly $40 billion total — were held at SVB. With the FDIC standard insurance limit at $250,000 and Circle’s deposit far above that, the question over the weekend was whether the federal authorities would invoke a systemic risk exception.
USDC’s market price reacted immediately and brutally: by Saturday morning USDC was trading at $0.95 on Coinbase, $0.93 on Curve, and briefly touched $0.88 in thinly-traded venues. Holders rushed to convert USDC to USDT (which traded at a premium), DAI (which followed USDC down because the PSM kept the two pegged together), and to off-ramp entirely. Several DeFi protocols that depended on USDC as collateral became temporarily insolvent; Compound paused borrowing; Aave debated emergency parameter changes.
On Sunday 12 March, the US government announced full coverage of SVB deposits. USDC immediately repegged to $1.00. The whole episode lasted approximately 60 hours, but the lessons stuck: Circle restructured its reserve custody across more banks, audit cadence accelerated, and the broader market re-examined the assumption that fully fiat-backed stablecoins carry no banking-system risk.
USDe’s funding-rate flash, late 2024
Ethena’s USDe is collateralized by ETH and BTC longs hedged by perpetual futures shorts on centralized exchanges. The hedge works when funding rates are positive (perp longs pay shorts), which has historically been true 70-80 % of the time. In a brief stress event in late 2024 driven by extreme positioning unwinds, funding rates went sharply negative on multiple venues simultaneously, eroding USDe’s yield buffer.
USDe briefly traded as low as $0.992 on Curve before the protocol’s Reserve Fund and arbitrage flows restored the peg. The deviation was small in absolute terms but informative about the mechanism: USDe’s stability depends on the centralized perpetual venues remaining solvent and accepting collateral, neither of which is guaranteed under extreme conditions.
What every stablecoin holder should take from this history
Three patterns recur. First, stablecoins fail under exactly the conditions that make them most valuable: when the broader market is selling, when banking infrastructure is stressed, when liquidations cascade. The peg’s strength is conditional. Second, the redemption channel matters more than the issuer’s logo: USDC’s depeg lasted as long as the SVB question was open and reverted the moment redemptions reopened. Third, diversification across mechanism families matters: holders concentrated in a single mechanism family take coordinated risk; a holder split across fiat-backed and crypto-backed stablecoins held by different governance systems is more robust.