Stablecoin peg risk refers to the possibility that a stablecoin may lose its intended value parity with its underlying reserve asset, typically a fiat currency like the US dollar. This risk arises from insufficient collateralization, algorithmic failures, or regulatory pressures, leading to a depegging event. Maintaining the peg is central to a stablecoin’s utility and reliability.
Context
The stability of stablecoins is a constant area of scrutiny, with recent events highlighting the severe consequences of peg failures for market confidence. Regulatory bodies are increasingly focusing on robust reserve attestations and operational transparency to mitigate this risk. The ongoing debate concerns the most effective mechanisms for ensuring stablecoin integrity and preventing systemic disruptions.
A multi-action smart contract logic error in a deprecated lending pool allowed an attacker to repeatedly bypass the solvency check, draining $1.8M in MIM.
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