Moody’s Analytics: Large-cap stablecoins have depegged 609 times this year

A new report by Moody’s Analytics, a leading provider of economic and financial research, reveals that large-cap stablecoins, such as USDT, USDC, and BUSD, have deviated from their pegs to fiat currencies 609 times in 2023. The report defines a depegging event as a deviation of more than 1% from the target value for more than 10 minutes.

The report analyzes the factors that contribute to the stability and volatility of stablecoins, such as supply and demand, regulation, governance, collateralization, and market sentiment. It also compares the performance of different types of stablecoins, such as fiat-backed, crypto-backed, and algorithmic.

According to the report, fiat-backed stablecoins, which account for more than 90% of the total stablecoin market capitalization, have the highest frequency of depegging events, mainly due to the mismatch between their on-chain and off-chain liquidity. Crypto-backed stablecoins, such as DAI and LUSD, have lower depegging rates, but higher volatility, due to the fluctuations of their underlying assets. Algorithmic stablecoins, such as FRAX and OHM, have the lowest depegging rates, but also the lowest market share and adoption.

The report concludes that stablecoins face significant challenges and risks in maintaining their stability and credibility, especially in the face of increasing regulatory scrutiny and competition. It also suggests that stablecoins need to improve their transparency, governance, and risk management to enhance their resilience and trustworthiness.