What’s a stablecoin?
Mostly attempted to achieve algorithmically and/or through collateralization — a stablecoin is a cryptocurrency that should be pegged or tied to a specific currency, mostly the United States Dollar (USD). Stablecoins are created mostly to be able to use a non-volatile currency on web3 and decentralized finance or “DeFi” platforms.
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Criteria
A stablecoin will only be added to this list once the stablecoin loses its peg a.k.a. “depegs”, and doesn’t re-gain the $1 peg for months.
Temporary depegs especially for centralized stablecoins like USDC won’t be added to the list.
23
failed stablecoins as of today
Acala USD (2022)
“On Aug. 14, a hacker took advantage of a bug on the iBTC/aUSD liquidity pool which resulted in 1.2 billion aUSD being minted without collateral. This event crashed the USD-pegged stablecoin to a cent, and in response, the Acala team froze the erroneously minted tokens by placing the network in maintenance mode.” — Cointelegraph
flexUSD (2021-2022)
After the CoinFLEX yield platform halts withdrawals due to “extreme market conditions last week and continued uncertainty involving a counterparty“, flexUSD — which is a stablecoin where people could earn 18% interest on the CoinFLEX platform, collapses.
Deus Finance (2021 – 2022)
As the market continues to mourn over losses on the Terra (LUNA) UST and LUNA debacle, DEI, a stablecoin used as a collateral mechanism for third-party instruments built on the Fantom (FTM)-based decentralized finance (DeFi) protocol DEUS Finance (DEUS), has failed to maintain its dollar peg, falling below $0.60 cents on Monday.
As the price of DEI hit an all-time low of $0.52, its market capitalization also followed, dropping from almost $100 million to around $52 million. However, despite the depegging of its stablecoin, DEUS Finance’s governance token, DEUS, went up from $163.40 to $327.28, before falling to $255.36. — Cointelegraph
Terra/Luna (2019 – 2022)
Traders of Terra’s LUNA tokens suffered some of their biggest weekly losses in recent months as prices fell 99.7% in a week, data shows.
The LUNA price fell 96% in the past 24 hours alone, pushing it to less than 10 cents. That’s down from about $60 earlier this week and a record $120 in mid-April.
A change in market dynamics caused LUNA prices to snap at a breakneck pace. LUNA plummeted through several support levels as terraUSD (UST), a Terra-issued stablecoin that’s meant to be priced 1:1 to the U.S. dollar, lost its peg.
The selling pressure on LUNA started over the weekend as investors liquidated their earnings on Anchor, a Terra protocol for earning yields on UST, pushing interest rates lower, analytics suggest. — CoinDesk
DefiDollar (2020 – 2022)
No media coverage available
BeanStalk (2021 – 2022)
The stablecoin protocol saw its own governance proposal system exploited enabling the malicious actors to extract all of its $182 million in collateral.
Credit-based stablecoin protocol Beanstalk Farms lost all of its $182 million collateral from a security breach caused by two sinister governance proposals and a flash loan attack.
The problem for the protocol was seeded by suspicious governance proposals BIP-18 and BIP-19, which were issued on Saturday by the exploiter, who asked for the protocol to donate funds to Ukraine. However, those proposals had a malicious rider attached to them th ultimately created the sinkhole of funds from the protocol, according to smart contract auditor BlockSec. — Cointelegraph
Wault Finance (2021 – 2022)
No media coverage available
OpenDAO (2021 – 2022)
No media coverage available
Coffin Dollar (2021 – 2022)
No media coverage available
Empty Set Dollar (2020 – 2022)
No media coverage available
BondAppetite (2021)
No media coverage available
Stand Cash (2021)
No media coverage available
Freeliquid (2021)
No media coverage available
Midas Dollar (2021)
No media coverage available
bDollar (2020 – 2021)
No media coverage available
unified Stable Dollar (2020 – 2021)
No media coverage available
Iron Finance (2021)
Iron Titanium token (TITAN) – the share token of a decentralized finance (DeFi) protocol that was once worth $2 billion – has fallen to near zero.
The token was recently changing hands for around $0.000000035, down from Wednesday’s high of $65. The fallout, which has been swift, has brought the project to its knees.
Some argue the interest from billionaire investor Mark Cuban has only exacerbated the situation as people discovered his DeFi wallet and alleged that he is the sole provider of TITAN/Dai on the Polygon blockchain. — CoinDesk
Dynamic Set Dollar (2020)
No media coverage available
One Cash (2020)
No media coverage available
bitUSD (2014 – 2019)
“BitUSD, the earliest mainstream stablecoin launched in July 2014, lost its peg with the US dollar in November 2018 and hasn’t recovered since. BitUSD was designed as the native currency of a platform launched by Daniel Larimer and Charles Hoskinson BitShares. It is collateralized by BitShares tokens.
As BitMEX Research pointed out, BitUSD had a flawed price stability mechanism since it only protects against the scenario where the value of BitShares falls and not when the value of BitUSD falls. The mechanism to hold the $1 peg was psychological.” — The Block
QCash (2019)
No media coverage available
Basis Cash (2018)
“Basis, the most well-funded stablecoin startup, has confirmed that it is shutting down and returning all of its remaining funds to investors.
The company realized that the regulatory landscape was too unfavorable to launch the project, according to an interview published today in Forbes. The startup’s move to return funds to investors was first reported by crypto news site The Block.
Originally called Basecoin, Basis had secured $133 million in funding to build an algorithmic stablecoin. Its founder, Nader Al-Naji, frequently described the project using code to maintain price stability for its token in the same way the U.S. Federal Reserve does for the dollar.” — CoinDesk
NuBits (2014 – 2016)
“NuBits, a stablecoin first introduced in 2014, provides an illuminating case study for how stablecoins work in practice. It has been functional for over 3 years, ever since the beginning of the stablecoin concept, and is currently the only live example of a stablecoin in the Seigniorage Shares category. Well, mostly functional. NuBits has suffered two big crashes, with extended peg breaking. Fortunately for us, there are valuable takeaways to be garnered from those crashes.” — Reserve Research Team
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