According to a recent study, stablecoins USDC by Circle and DAI by MakerDAO have fallen below $1 more often than other stablecoins over the past few years.
A report from S&P Global suggests that stablecoins whose value is pegged to the U.S. dollar aren’t so stable as they deviate from the $1 price quite often, with some doing so more frequently.
The report is based on a study by Cristina Polizu, Anoop Garg, and Miguel de la Mata, who examined the market behavior of the four largest stablecoins:
- USD Coin (USDC);
- Dai (DAI);
- Tether USDt (USDT);
- Binance USD (BUSD).
The analysis showed that over the past two years, prices of USDC and DAI have been below $1 more often than USDT and BUSD. Thus, the longest period of USDC’s depreciation lasted 23 minutes, while DAI’s — 20 minutes. At the same time, the value of both assets fell below $0.90. The price of USDT decreased to $0.95 for no more than a minute, and BUSD quotes didn’t drop below $0.975 at all from June 2021 to June 2023.
The authors of the study stressed that maintaining the peg and stabilization mechanism requires good governance, adequate reserves, liquidity, market confidence, and acceptance.
According to CoinGecko, there are currently about 90 stablecoins pegged to a particular fiat currency. The total capitalization of the stablecoin market is ~$124 billion, about 99% of which are coins pegged to the U.S. dollar.Tether dominates the stablecoin market and is also actively expanding its presence in various regions, thanks to cooperation with payment providers.