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Why Stablecoins Fail : An Economist's Post-Mortem on Terra, No. 22-24

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Why Stablecoins Fail : An Economist's Post-Mortem on Terra, No. 22-24

DATE: July 2022

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ABSTRACT: Why do some stablecoins, such as Terra's UST, fail but others do not? Was Terra just an unlucky victim of a classic bank run or speculative attack? Or was its high-yield deposit offering doomed to fail like a Ponzi scheme? What is the limit of the stablecoin's algorithm? What makes payment stable? In this article, we'll dive into potential answers to these questions about the failed stablecoin.

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Wong, Russell and Federal Reserve Bank of Richmond. "Why Stablecoins Fail : An Economist's Post-Mortem on Terra, No. 22-24," Economic Brief (July 2022). https://fraser.stlouisfed.org/title/6034/item/619224, accessed on May 28, 2023.

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DIGITAL COPY SOURCE: Federal Reserve Bank of Richmond

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