In the case of wrapped assets, the underlyings are held in custody by a third party (e.g. Bitgo, in the case of wBTC, or the Lido smart contract in the case of stETH). If access to the assets is lost by the custodying entity (e.g., contract vulnerability or private key compromise), the protocol will continue to treat the wrapper as 1:1 with its underlying, even though its real value would be between 1 and 0.