Declared reference and market price
A pegged asset seeks to track a reference, such as a currency. Its market price comes from trading and can move away from that reference. To understand the difference, examine the mechanism that tries to bring the two values closer, rather than treating the name of the token as a guarantee.
The mechanisms vary and may be combined. For assets that hold reserves, the composition of those reserves and the redemption conditions matter. Arbitrage uses price differences as an incentive to trade. Other models rely on rules for issuance, burning or algorithmic incentives.
Identifying the model helps frame the right questions. Not every holder can redeem directly with the issuer, and not every asset keeps the same reserves. The conditions of the mechanism have to be checked for that token.
Dependencies that can widen the deviation
Redemption depends on the capacity and the conditions of whoever offers it. Hours, eligibility, the institutions used and operational restrictions can limit that access. A nominal reference that is still in place does not mean that everyone can exercise it at that moment.
Arbitrage depends on liquidity, capital and access to the markets or to redemption. When those conditions deteriorate, correcting a deviation can become harder. Reserves and the trading price should therefore not be read as if they were the same information.
In algorithmic models, examine where the demand needed for the adjustment comes from and how the rule reacts to a loss of confidence. The incentive set out in the design does not guarantee that participants will be willing to carry it out under the conditions required.
Read the data together with the conditions of the mechanism
Check the price, market depth, redemption conditions and reserve information where they apply. Note the date and the scope of each piece of information: a price at one moment, or a report from one date, does not on its own describe the full capacity to exit.
Also consider common dependencies among assets, such as the issuer, the custodian or access to the market. Holding several tokens does not remove those relationships. For a depeg cover, the reference, the margin and the period defined in the contract determine how the deviation will be assessed.
