"Stablecoins are nearing a $300-billion market cap, but adoption remains limited due to risks around depegging, collateral and trust. The depegging of stablecoins such as NuBits (2018), TerraUSD (2022) and USDC (2023) has revealed vulnerabilities across both algorithmic and fiat-backed models. The collapse of TerraUSD wiped out roughly $50 billion in value and exposed the systemic fragility of algorithmic designs. In 2025, Yala's Bitcoin-backed YU lost its peg following an exploit, underscoring issues of thin liquidity and cross-chain security."
"Stablecoins just crossed a major milestone, with total market capitalization now above $300 billion. As of Oct. 6, 2025, CoinMarketCap reports roughly $312 billion. Despite rapid growth, stablecoins still haven't achieved mainstream adoption. One major reason is the recurring instances of these tokens losing their peg to the assets that back them whether fiat currencies like the US dollar, commodities like gold or even other cryptocurrencies."
"Historical overview of stablecoin depeggings Stablecoin depeggings have repeatedly exposed flaws in how these assets are designed. Early examples, such as the 2018 collapse of NuBits, showed how fragile unbacked algorithmic models can be. Even Tether's USDt (USDT) briefly fell below $1 in 2018 and again in 2022, driven by market panic and liquidity shortages events that fueled concerns about its reserves."
Stablecoins have grown rapidly and surpassed a $300 billion market capitalization, yet adoption remains limited by persistent stability risks. Multiple depeggings—NuBits (2018), Tether's brief drops, TerraUSD's 2022 collapse, USDC's 2023 slip and Yala's 2025 exploit of Bitcoin-backed YU—illustrate vulnerabilities in algorithmic, fiat-backed and cross-chain designs. Common causes include insufficient collateral, thin liquidity, market panic, reserve opacity and cross-chain security flaws. Consequences range from wiped-out market value and contagion to loss of trust. Preventive measures include stronger collateralization, transparent reserves and audits, robust liquidity provisioning, stress testing, insurance mechanisms and improved cross-chain security practices.
Read at cointelegraph.com
Unable to calculate read time
Collection
[
|
...
]