The state machine

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The five states

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What each state implies for a consumer

• PEGGED — the asset is doing what it promises. Lending protocols can price collateral at par. Insurance has nothing to fire on. Agents can swap freely.
• DRIFT — early warning. The spread crossed the threshold for “this is no longer normal noise.” Subscribers get a notification. Most DRIFTs resolve back to PEGGED without ever reaching DEPEG. Lending protocols might tighten LTV by a few points; insurance preps payout logic; agents pause discretionary swaps.
• DEPEG — the spread crossed the threshold for “this is materially broken right now.” Liquidation engines should already have pulled back. Insurance is firing. Agents should hard-pause any action that depends on this asset’s peg.
• CRITICAL — the spread is large enough that recovery is not assumed. Treat the asset as a different (riskier) asset. Wind down exposure.
• BLACK_SWAN — the most extreme band (spread beyond 2× critical, or hyUSD CR < 100%): a terminal-grade break. Auto-exits via the normal hysteresis if the spread genuinely recovers — it is not a no-reset terminal state (ADR-0025).
• UNKNOWN — a non-alerting status. On routine stale/low-confidence/decoder-drift the engine skips the recompute and holds the last published state rather than flipping to UNKNOWN (unreliable sources are flagged monitoring_only (beta) — their alerts are live but provisional). It does publish honest-dark UNKNOWN when an anchor is detectably broken — a >10% premium on a NAV-priced asset, via the NAV-sanity gate (ADR-0025).

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The transitions

   ┌───────────┐
   │  PEGGED   │←──┐
   └────┬──────┘   │
        │ 30s @    │ 120s @
        │ ≥ drift  │ < drift-exit
        ▼          │
   ┌───────────┐   │
   │  DRIFT    │───┘
   └────┬──────┘
        │ 30s @
        │ ≥ depeg
        ▼
   ┌───────────┐
   │  DEPEG    │
   └────┬──────┘
        │ 30s @
        │ ≥ critical
        ▼
   ┌───────────┐
   │  CRITICAL │
   └───────────┘

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What gets emitted

{
  "alert_id": "9c8e7f3a-...",
  "asset": "USDC",
  "from_state": "PEGGED",
  "to_state": "DRIFT",
  "detected_at": "2026-05-26T14:32:11.482Z",
  "spread_at_trigger": -0.0034,
  "intrinsic_usd": 1.0000,
  "market_usd": 0.9966
}

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What does NOT get emitted

• Sub-state noise. A spread oscillating between 25 and 32 bps with threshold at 30 bps stays in DRIFT — no alert flood.
• Recovery within the entry dwell window. If the spread crosses 30 bps for 5 seconds and falls back, no transition fires.
• Counts of “ticks since last alert” or similar accumulator state. Each transition is independent; we don’t publish “USDC has spent 47 minutes in DRIFT today.”

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