How thoroughly was the peg tested? I know it was exercised to some extent on the testnet, but that only lasted about 4 weeks as I remember and it was never working 100%.
What do you mean? The peg was tested for over a year. First it was coded in Python in 2018, I personally tested it. Then Yshurik coded it in c++. Then we even coded our own exchange dynamicpeg.com to show exchanges how to use it which was running for a year flawlessly. The thing is we can't know if an exchange properly follows our API and code. This is why Latoken had some issues because they didn't really let us audit their implementation. However they seem to be working okay. I think also a lot of their issues weren't even peg related as their exchange appeared very buggy anyways. Perhaps they worked it out by now... who knows.