Stablecoin Depegs: What Merchants Should Know

Stablecoins are designed to stay close to one US dollar. Most of the time they do, which is why merchants accept them as dollar payments. Occasionally, though, a stablecoin trades noticeably below its target, sometimes for minutes and sometimes for days. These events are called depegs. Merchants who accept stablecoins benefit from understanding them and deciding in advance how to respond.

This article is general information and not financial advice.

What a depeg is

A depeg happens when a stablecoin's market price moves away from its intended value. A dollar stablecoin trading at 0.97 has depegged by about three percent. Small deviations of a fraction of a percent happen regularly in thin markets. Larger deviations are rarer and usually linked to specific events.

Why depegs happen

Common causes include:

Cause	How it creates a depeg
Concerns about reserves	Holders rush to sell or redeem
Problems at a bank or custodian holding reserves	Doubts about access to backing assets
Market-wide panic	Liquidity dries up and prices swing
Design weaknesses	Algorithmic or undercollateralised models fail under stress
Exchange or bridge issues	Specific versions of a token lose value
Regulatory actions	Uncertainty about issuance or redemption

Different stablecoins have different designs and risks, so depeg likelihood and severity vary.

How depegs affect merchants

Merchants face several possible effects:

1. Revenue value. Payments received in a depegged stablecoin are worth less if converted during the event.
2. Pricing gaps. Customers may pay in the weaker stablecoin while you price in dollars.
3. Conversion delays. Exchanges may see heavy volume or pause certain pairs.
4. Customer questions. Buyers may ask whether you still accept the affected token.
5. Accounting. Recording revenue at depegged values affects reports.

For merchants who convert payments quickly, the impact is limited to payments received during the event. Merchants who hold large balances in one stablecoin face greater exposure.

Policies to set in advance

Decide on policies before a depeg happens:

• Acceptance threshold. For example, pause acceptance of a stablecoin if it trades below a set level for a sustained period.
• Diversification. Hold balances across more than one stablecoin or convert regularly.
• Conversion schedule. Convert to your operating currency on a predictable schedule.
• Customer communication. Prepare a short notice explaining temporary changes.
• Terms of service. State that accepted assets may change during unusual market conditions.

Written policies prevent rushed decisions during stressful moments.

Monitoring

Track the prices of stablecoins you accept using reliable market data. Set alerts for deviations beyond your threshold. Follow official communications from issuers, since they often explain the cause and expected resolution of a depeg.

During a depeg

If a significant depeg occurs:

1. Confirm the price deviation across several sources
2. Decide whether to pause acceptance according to your policy
3. Update checkout to hide or disable the affected token if needed
4. Communicate with customers clearly and briefly
5. Avoid panic conversions at the worst prices without considering the situation
6. Record the event and your actions for accounting

Many depegs recover, but some do not. Your policy should balance protecting revenue with avoiding losses from selling at the bottom.

After the event

Review what happened. Did your threshold work? Did customers understand the changes? Was your stablecoin mix appropriate? Adjust policies based on the experience.

Accepting more than one stablecoin

Accepting two widely used stablecoins, such as USDC and USDT, gives flexibility if one experiences problems. Proud Globe accepts both on several networks and states in its terms that accepted assets can change, which lets checkout adapt quickly if a stablecoin loses its peg.