Moody's Analytics is launching a new stablecoin service that will use artificial intelligence to predict likely uncouplings "on a 24-hour time horizon" while providing real-time information on the liquidity and stability of stablecoin issuers.
Stablecoin Market Getting More Stable, Moody's observed in its November 6 announcement for the launch of Digital Asset Monitor.
So far in 2023, there have been 1,914 unpeggings, of which 609 were from large-cap stablecoins backed by fiat. This compares with 2,847 in all of 2022, of which 707 were large caps. While some correlation can be seen with rising interest rates, a number of currency-specific causes can also be detected, Moody's said.
Moody's DAM will track 25 fiat-backed stablecoins that represent more than 92% of the total stablecoin market capitalization. They include Tether (USDT), USD currency (USDC) and PayPal currency (PYUSD). More stablecoins will be added to the service over time, according to their website:
“Digital Asset Monitor (DAM) is a machine learning model that combines on- and off-chain data, financial statements, and economic indicators.”
In addition to identifying decoupling risks, the service will indicate "the market dynamics and liquidity of the stablecoin, the stability of the stablecoin issuer, the custodians holding the stablecoin assets, and the quality of these reserves." Additionally, it will provide “a transparency index that will highlight the quality of disclosures made by the entities behind these fiat-backed stablecoins.”
Related: AI and blockchain will 'reshape sectors' and create new markets from scratch: Moody's
"The tool was built in one year using agile development frameworks to address customer needs," Moody's Analytics senior director of product innovation Yiannis Giokas said in the announcement.
In 2023, Moody's Analytics reported 609 cases of decoupling between large fiat-backed stablecoins, up from 707 in 2022.
The decoupling indicates fluctuations of more than 3% in a day against their fiat parities, highlighting the volatile nature of the sector.Fountainhttps://t.co/VaiTJsqE5x pic.twitter.com/EEv7MXa9CR
- PakoCrypto₿ox (@PakoCryptoBox) November 6, 2023
He reports that the company was developing the new service. came up at the beginning of the year. Moody's Analytics is a company independent of Moody's Ratings. He provides commentary on aspects of the cryptoasset market on a regular basis.
Magazine: Unstable currencies: depegging, bank runs and other risks lurk
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