When Silicon Valley Bank collapsed last March, the USDC stablecoin lost its peg because $3.3 billion of its reserves were deposited at the bank. Last week the Federal Reserve published a thought provoking note exploring the USDC stablecoin depeg event as a means to learn more about stablecoins.
Each stablecoin has distinctive issuance and redemption processes (primary markets), even for similar stablecoins. The ease and accessibility of minting and redemption could impact events during a stablecoin de-peg. Additionally, there were significant differences between activity on centralized and decentralized exchanges during the depeg event.
Perhaps the most significant finding is that price activity during a depeg event doesn’t tell the whole story. Two stablecoins, USDC and DAI, showed very similar price activity but behaved differently in other ways.
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