Stablecoins face challenges maintaining their $1 peg during periods of market volatility.
USDT and USDC have shown resilience but can still experience brief de-pegging in crises.
Newer algorithmic stablecoins like USDD and FRAX struggle more with maintaining peg stability.
Recent market upheavals have highlighted the ongoing struggle for stablecoins to maintain their $1 peg during periods of instability. Major events like the Terra collapse and the US banking crisis exposed vulnerabilities in the stablecoin market.
Even established stablecoins like USDT and USDC experienced temporary de-pegging during these volatile times. Newer and algorithmic stablecoins face even greater challenges in maintaining stability.
Terra and FTX Collapse Trigger Stablecoin De-Pegging
The Terra ecosystem’s collapse in May 2022 sent shockwaves across the crypto market. Many algorithmic stablecoins, including USDD and FRAX, experienced sharp declines, eroding trust in this type of stablecoin and causing widespread panic. Other stablecoins, while affected, managed to remain relatively stable during this turbulent period.
The FTX collapse in November 2022 further shook stablec…
The post Stablecoin Stability Tested: A History of De-Pegging Events appeared first on Coin Edition.
