Recently, I saw discussions about depegging in the community, which reminded me that the 2023 stablecoin crisis is worth reviewing.

Speaking of depegging, simply put, it means that the price of a stablecoin deviates from its promised peg, usually the US dollar. It might sound like no big deal, but the depeg events of USDC and DAI really caused quite a stir in the market at the time.

The most memorable was USDC. Circle's USDC was originally backed 1:1 with USD, but it was exposed that about $8.7 billion in reserves were held at Silicon Valley Bank, which later collapsed. This immediately triggered panic, with some major exchanges suspending USDC/USD trading, and platforms shutting down 1:1 conversions between stablecoins. You can imagine how quickly the market reacted and how big the impact of the depeg was.

DAI's situation wasn't much better. Although DAI is backed by crypto assets, the problem is that 45% of its reserves are USDC itself. So when USDC ran into issues, DAI also depegged, dropping as much as 7%. It’s like a domino effect—when one stablecoin has a problem, others are affected too.

This incident actually exposed a very real issue: even stablecoins are not truly stable. Many people think stablecoins are safe, but in reality, reserve management and risk control are just as critical. If the reserves don’t match the promised peg, depegging can happen, and no matter how secure the promise, it’s useless.

So since then, I’ve become even more convinced of one principle—before making any decisions in the crypto market, you must thoroughly understand the project’s reserve composition and risk factors. Don’t blindly trust any stablecoin’s promises; doing your own research is the best insurance. That’s also why many people now pay more attention to stablecoin projects with higher transparency and more sufficient reserves.