Stablecoins Face Depegging Issues: S&P Global Report
A recent report from S&P Global reveals that certain stablecoins, including Circle’s USD Coin (USDC) and MakerDAO’s Dai (DAI), have been less stable than others like Tether (USDT) and Binance USD (BUSD) in recent years. The study conducted by Dr. Cristina Polizu, Anoop Garg, and Miguel de la Mata analyzed the valuation and depegging trends of five prominent stablecoins.
The findings show that both USDC and DAI have experienced more frequent depegging incidents compared to USDT and BUSD over the past two years. Notably, USDC’s value dropped below $0.90 for 23 minutes, while DAI’s value decreased for 20 minutes, marking the most significant depegging event during the study period. In contrast, USDT’s value fell below $0.95 for only one minute, and BUSD consistently maintained a value above $0.975.
The report also highlights the importance of robust governance, collateral, reserves, market confidence, and adoption to ensure stablecoin stability. Additionally, the market dynamics have shifted, with USDT expanding its supply and dominating the market share.
Factors Affecting Stablecoin Stability: Key Takeaways
According to a report by S&P Global, certain stablecoins, such as USDC and DAI, have shown a greater tendency to depeg compared to USDT and BUSD. These depegging incidents have been more frequent and have lasted longer for USDC and DAI.
The study highlights the importance of factors like robust governance, collateral, reserves, market confidence, and adoption in maintaining stablecoin stability. Brief depegging events lasting only a minute may be considered noise, but extended depegging durations are more significant.
The report also mentions the impact of specific events, such as the collapse of the Silicon Valley Bank, on stablecoin devaluation. The market dynamics have shifted, with USDT expanding its supply and capturing a dominant market share compared to USDC.
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