Try Quests to earn cryptoStableCoin Pegs
In this dashboard I will be taking a look at how close the popular stablecoins have stayed to their pegs.
A stablecoin is an asset pegged to another asset the most common of which are stablecoins pegged to the dollar, stablecoins can also be pegged to assets such as gold or silver. They are seen as important assets within crypto due to the volatility of other crypto assets with many investors turning to stable coins during down turns
There are two main types of stablecoin, collatersied and algorithmic.
An algorithmic stablecoin uses an algorithim to maintain its peg to a currency and a collaterised stable coin is backed by either crypto or fiat.
DAI issued by Maker Dao is collateralised and backed by crypto, you can lend a number of assets including ETH, BTC, UNI, YFI, MANA, MATIC and more in order to mint DAI. You have to lend more to Maker DAO than you can mint DAI, leading to DAI being over collateralised.
USDT, BUSD and USDC are majority backed by real world reserves which can consist of majority holdings of USD dollar, alongside, commodities and bonds. They aim to be backed 1 to 1 with assets in their reserves.
UST is the only algorithmic stable coin I will be looking into in this dashboard, however, there are other popular ones such as MIM - Magic Internet Money and Frax.
The UST pegging drew a lot of attention from the Crypto market with the price dropping to nearly 10 cents at it's lowest on the 13th of May. After a drop of 1.4 cents on May 8th it struggled to regain it's pegging of 1 dollar in the last 5 days.
On the minimum price daily we see that USDC varies the least from it's pegging, USDT sees a drop of 3c from it's pegging. The fluctuation in USDT caused some alarm after the de-pegging of UST a few days earlier. Decrypt - Tether Loses It's Pegging
During moments when USDT drops below a dollar users can redeem USDT tokens for the equivalent amount of USD. Reducing the circulating supply of USDT and helping to restore its pegging, importantly USDT is backed by a number of assets. It also maintains USDT not in circulation to deal with added demand and upward price fluctuation. Tether - Transparencey
Here we can see the max price of the main 4 stablecoins excluding UST, with USDT's fluctuations being the lowest out of all the stablecoins. DAI and USDC fluctuate over a cent away from a dollar on May 12th. BUSD fluctuates river 4 cents away from its pegging on May 12th with its max price being 1.04 cents.
As we can see in the chart above the largest stable coins have stayed relatively close to their pegs, with some fluctuations in price on average which are fractions of cent. Remaining relatively stable overall. The two stable coins with the biggest flucations are BUSD and
UST pegging was based on an arbitrage system, where individuals or bots could redeem 1$ worth of Luna when the price of UST dropped below 1$, the UST swapped would then be burnt with the idea being that a lower supply would eventually restore the peg of it's price. While it managed to bounce back from a number of lows, the dilution in the supply of Luna caused by the redemption of Luna from UST caused the foundation to halt the blockchain due to the ease of a voting attack on Luna as the Luna supply expanded by billions. Ultimately there were a number of factors in play and having one point of failure in Luna could have been UST's downfall. Terra Blockchain Halted - Forbes