Large Cap Fiat-Backed Stablecoins Depegged Over 600 Times in 2023: Moody’s Analytics

There have been more than 600 D pegs among large cap fiat backed stablecoins this year. That's according to Moody's Analytics joining us now to discuss is Moody's Analytics, senior director and product manager Yanis Yoki. Welcome to the show, Yanis. Hello, thank you very much for having me. Thanks for being here. Now, talk to us about these findings. What were the major stable coins here? And what led to this seemingly large amount of dgs this year? I would say that um currently, we are monitoring most of the fiat stable coins that represent something like 92% of the market gap for stable coins. And given that it's that is, this is a relatively, let's say new market that is still trying to mature. It is logical that there are going to be a significant volatility and that volatility has been captured in our debate meric. So, uh which ones though were the most egregious? And when it comes to when we look at the market cap universe, uh when we look at the stable coin universe by market cap, uh most of them, it would be us DT us D C, et cetera. Some of the majors. So we, we, there are a handful that basically are, are most of the stable coins out there, of those major uh stable coins, which ones were the big, the, the most volatile uh I would say, first of all, we have to define what is a debate according to our methodology. And the debate is intraday volatility over 3% because we want to treat the fiat back the Bitcoin as an equivalent of a digital representation of the fiat currency that they are, you know, uh representing. So we wouldn't treat uh fiat back stable coin as an emerging market currency. That's why we picked the 3%. And you will see in the white paper that we published today where we describe the whole methodology and the events that we captured that the two or three, let's say top stable coins by market capitalization, they had almost 50% of the day's event. OK? You're not naming names, our white paper is published and you can read the names at your own convenience. II, I mean, OK. But uh you're here now and I haven't read the white paper yet. I would love to. But uh if you don't mind, go out a couple of names and tell us uh something about it. OK. Sure. So for example, B US D de something like 68%. Is that bud the uh is that the one that was actually issued was that, yeah, the issue. That's the paxos issued, not the one that B issued for, not the P uh the US D or for example, the largest token US DT it packed 23% of the days or, or circles us DC, something like 64% of the days that we have in our, you know, uh historical data. So, so the more than 3% yes, there should be three cents a three cent. Uh let's say three cent price vault only on. Wow. Ok. This debate could be temporary and the price might you know, recover. But if you are trading or if you are using that for a payment, when you send out $1000 you want the counter party to receive $1000 not 9009 7. What are some of the reasons for these deep eggs? 3% is a lot three cents on the dollar. What were some of the reasons for this volatility? We, we have identified, let's say three major families of reasons. One is market volatility that is driven by the overall sentiment of the market. The other one is how debt is the liquidity for specific tokens, meaning how easy it is for you to enter an exit. And of course, the counter party risk, who is the issuer? And what are the risks associated with that entity? Who are the custodians that are holding the reserves on their behalf? And how well are they the financials in order for them to be able to own or any redemption and of course, what assets they hold in order to back the back of the token. All right, Yanis, we are all out of time. Thanks for joining the show and providing that insight for us. Thank you for having me. That was Moody's Analytics, senior director and product manager, Yanis Yoga.