Analysis Reveals Variations in Stability Among Dollar-Pegged Stablecoins: USDC and DAI More Prone to Depegging
Summary:
USD-pegged stablecoins, such as USDC and DAI, are prone to depegging, with USDC and DAI spending more time below $1 compared to USDT and BUSD. The longest depeg event for USDC was 23 minutes at $0.90, while DAI depegged for 20 minutes. However, USDT has been more stable overall. The researchers emphasize the importance of good governance, collateral, reserves, liquidity, market confidence, and adoption in maintaining stablecoin pegs. USDT has seen a 25% increase in supply, reaching 83 billion, while USDC's supply has shrunk by 41.5% during the same period.
Dollar-pegged stablecoins, including Circle's USD Coin (USDC) and MakerDAO's Dai (DAI), have experienced depegging but some are more prone to it than others, according to S&P Global analysts. A research paper from Dr. Cristina Polizu, Anoop Garg, and Miguel de la Mata revealed that USDC and DAI have spent more time below a dollar compared to USDT and BUSD over the past two years. The longest depeg event was USDC dropping below $0.90 for 23 minutes and DAI for 20 minutes. However, USDT only dipped below $0.95 for one minute, while BUSD remained above $0.975 between June 2021 and June 2023. The frequency of depegging was higher for USDC and DAI. In March 2023, USDC dropped to $0.87 due to the Silicon Valley Bank collapse. The researchers noted that maintaining the peg requires good governance, collateral, reserves, liquidity, market confidence, and adoption. Despite concerns around Tether, the findings suggest that USDT has been more stable than USDC. USDT's supply has increased by 25% this year to 83 billion, giving it a dominant market share of 67%. In contrast, USDC's supply has shrunk by 41.5% and its market share has fallen to 21% during the same period.
Published At
9/12/2023 4:25:44 AM
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