- The tool is being launched against the backdrop of increasing stablecoin market stability
- It will track 25 fiat-backed stablecoins accounting for 92+% of the total market cap
- They include Tether, USD Coin, and PayPal Coin, more will be added to the service
Moody’s Analytics has introduced a new financial service that involves an AI tool to predict the risk of stablecoin depeggings in the immediate future. The tool will also provide insight into the platform’s stability and liquidity in real time, Cointelegraph reported.
The tool is being launched against the backdrop of increasing stablecoin market stability, according to a recent announcement by Moody’s.
2023 has been a far better year for stablecoins
Cointelegraph reports that there have been 1,914 depeggings in 2023 so far, of which just over 600 were of large-cap stablecoins backed by fiat money. This makes 2023 a far better year than 2022, when 2,847 stablecoins lost their pegs, of which more than 700 large-cap ones.
Most notably, these included TerraUSD, which crashed to a low of $0.25 in May 2022 as panicked investors sold their holdings. The stablecoin dragged the LUNA token down with it, which was in the top 10 cryptos by market cap at the time. Eventually, the entire Terra ecosystem went under.
Another high-profile depegging was that of Polkadot’s aUSD, the native stablecoin of DeFi platform Acala. It lost its peg to the US dollar and 99% of its value in August 2022 after hackers used a bug in a new liquidity pool to mint 1.28 billion tokens.
Tool to track Tether, USDC, PYUSD
Moody’s AI tool will track 25 fiat-backed stablecoins, which account for more than 92% of the total stablecoin market cap and include Tether, USD Coin, and PayPal Coin. The company will add more stablecoins to the service over time.
The service is based on Digital Asset Monitor (DAM), a machine learning model that combines economic indicators, financial statements, and on and off chain data.
Additional services
The tool will also indicate how stable the asset issuer is, the status of the custodians that hold the fiat assets backing the stablecoin, and the quality of this backing. It will also provide a transparency index that will emphasize the quality of disclosures provided by the entities behind the stablecoins, according to Moody’s announcement.
