Table of Links
2. Data and quantitative nature of the events
2.2. Transaction data analysis
3. Methodology
3.1. Network analysis: Triangulated Maximally Filtered Graph (TMFG)
4. Results
4.1. Correlations and network analysis
4.2. Herding analysis: CSAD approach
6. Implications and future research
6.1. Relevance for stakeholders
7. Conclusion, Acknowledgements, and References
6.2. Future lines of research
Most of the existing literature on stablecoins concerns their stability (Grobys et al., 2021), their role in portfolio diversification (Wang et al., 2020; Baur and Hoang, 2021), and crypto asset price formation (Barucci et al., 2022; Kristoufek, 2022). Due to the nascent interest in this research field and the rapid growth of decentralised finance, gaps in the literature still exist. Recent events around Terra project highlights the need to analyse specific topics that have been neglected until now: (i) stablecoins as a means of exchange, (ii) stablecoins’ role within the crypto space, (iii) regulation on stablecoins and related protocols and (iv) potential risk to financial stability. First, stablecoins could not be appropriate as a mean of exchange due to their vulnerability to “bank runs” and high transaction costs compared to non-blockchain alternatives (Mizrach, 2022). Second, the role of stablecoins as “bridge” in the crypto space could be considered a double-edged sword since they could jeopardise the system’s stability once becoming systemic. Third, the dependence of UST on Anchor protocol remarks the need for better scrutiny of third party protocols related to any stablecoin. Finally, it would be necessary to consider scenarios in which specific fragilities within the stablecoins’ ecosystem may give rise to systemic financial stability risks.
Authors:
(1) Antonio Briola, Department of Computer Science, University College London, Gower Street, WC1E 6EA - London, United Kingdom and UCL Centre for Blockchain Technologies, London, United Kingdom;
(2) David Vidal-Tomas (Corresponding author), Department of Computer Science, University College London, Gower Street, WC1E 6EA - London, United Kingdom, Department of Economics, Universitat Jaume I, Campus del Riu Sec, 12071 - Castellon, Spain and UCL Centre for Blockchain Technologies, London, United Kingdom ([email protected]);
(3) Yuanrong Wang, Department of Computer Science, University College London, Gower Street, WC1E 6EA - London, United Kingdom and UCL Centre for Blockchain Technologies, London, United Kingdom;
(4) Tomaso Aste, Department of Computer Science, University College London, Gower Street, WC1E 6EA - London, United Kingdom, Systemic Risk Centre, London School of Economics, London, United Kingdom, and UCL Centre for Blockchain Technologies, London, United Kingdom.
This paper is available on arxiv under CC BY-NC-ND 4.0 DEED license.
