Just how stable are stablecoins?

Quick Take

  • While theoretically all USD stablecoins are designed to be valued at $1, in reality, they deviate quite often
  • The Block has analyzed stablecoins’ stability in terms of two metrics – daily deviation and daily fluctuation
  • Despite the company’s opaque nature, Tether deviates the least and fluctuates the second-least amongst its stablecoin competitors

While USD stablecoins use different stability mechanisms (fiat-backed, crypto-backed or algorithmic/seigniorage-based), each is designed to mirror the value of a U.S. dollar. But in reality, they often fluctuate, trading either above or below that figure. In other words, one stablecoin might not be quite as stable as another.

As seen above, there are at least 17 stablecoins that are either already trading or that are anticipated to enter the market this year after raising a significant amount of venture capital.