In a study conducted by Deutsche Bank Research analysts, many stablecoin The result that the project will fail and only 14% will continue attracted attention. “Some may survive, but most will likely fail,” said the researchers, who expressed concerns about the industry.
Stablecoins are fiat money, gold, etc. They are digital currencies pegged to another asset, such as Because these assets are stable, many investors prefer them as a “safe haven” in the highly volatile crypto market.
Analysts examined approximately 334 stablecoins launched since 1800. They claimed that among the assets, only a few are currently available. They added that successful projects have three characteristics that unsuccessful projects lack: reliability, reserve support and tightly controlled systems.
According to research, 49% of stablecoins failed by only existing for 8 to 10 years. Analysts argued that “macroeconomic factors play a key role in determining the sustainability of a stablecoin.” “Issues related to governance and speculative forces may also indicate when an exit from the peg is likely,” said Marion Laboure, senior strategist at Deutsche Bank Research. Labore added:
“We chose to compare stablecoins to fiat currencies because their similarities historically make them similar as both are stable currencies. Both require large reserves and reliability from issuers. Many are exposed to speculative forces, and the majority of both stablecoins and historical currency pegs follow the USD.”
However, Tether, the issuer of stablecoin giant USDT, has spoken out against the Deutsche Bank Research report, claiming that analysts failed to produce “hard data” supporting their arguments. While researchers cited Terraform Labs’ TerraUSD as an example of the decline of stablecoins, Tether commented, “Comparison with Terra, an algorithmic stablecoin, is misleading and irrelevant to the discussion about reserve-backed coins.”
