In the stablecoin context, price stability is the extent to which a stablecoin's market price remains close to its stated reference value over time.
Stablecoin price stability can be evaluated through the size, frequency, and duration of deviations from the target value. Different trading venues can show different prices at the same time, so measurement should specify the market data and aggregation method used. A stablecoin can display low day-to-day volatility while still experiencing occasional severe depegs during stress.
This entry concerns stability of a stablecoin relative to its reference value. It should not be confused with the macroeconomic concept of price stability used by central banks for the general price level.
Price stability determines whether users can rely on a stablecoin as a predictable unit for payments, trading, collateral, or savings.
A dollar stablecoin that consistently trades within a narrow range around $1 exhibits stronger observed price stability than one with frequent multi-percent deviations.