The latest BIS paper on stablecoins delves into historical data, trying to establish whether or not they are stable and which types are less volatile. The title, “Will the real stablecoin please stand up?” is perhaps a giveaway about its conclusion – stablecoins struggle to keep their pegs.
Rather than purely focusing on the handful of larger stablecoins, it explores a more diverse range of 68 tokens. It found that more mature stablecoins are less volatile.
Across a period of almost five years, fiat backed stablecoins kept their peg 94% of the time, crypto backed 77% and commodity (gold) backed 50% of the days. Just seven out of the 68 stablecoins maintained the peg deviation to within 1% for more than 97% of their life span. Tether and USD Coin are included in the seven.
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