RiskIntermediate6 min
Stablecoin Risk
Core question
Is a stablecoin as safe as cash?
A stablecoin aims to peg its value to a reference (usually $1) — via reserves, over-collateralization, or an algorithmic mechanism. That peg is a promise, not a guarantee: if a stablecoin loses its peg (“depegs”), its market price can noticeably deviate from $1. A stablecoin pool is therefore not a cash equivalent — it carries the risk of the underlying mechanism and its reserves.
Look up in the Glossary: Stablecoin →What is meant to keep a stablecoin at $1
Three mechanisms – each carries a different risk.
- ReservesFor every coin, cash or something similar sits with the issuer. You rely on the reserves being there and being paid out.
- Over-collateralizedEach coin is backed by more crypto than it is worth. If the collateral falls too fast, the buffer is not enough.
- AlgorithmicNo block underneath: a mechanism grows or shrinks the supply to hold the price. If confidence breaks, there is nothing to lean on.
Schema, not market data. Many stablecoins mix these mechanisms; which applies is stated in each issuer's own disclosures.
Two real stablecoin pools side by side
Example: single exposure, no IL risk per DeFiLlama
USDC · Maple Finance
5.12%
APY
TVL: $2.92B
- TVL at least 50M USD
- Chain Ethereum is on the SKN3X reference list of established chains
- Listed as a stablecoin, single exposure, no IL risk per DeFiLlama
- Rewards below 20% of APY
- Protocol maple is an RWA issuer — allowlist factor suspended
Example: multi-exposure or IL risk per DeFiLlama
DAI-USDC-USDT · Curve DEX
0.00%
APY
TVL: $159.87M
- TVL at least 50M USD
- Chain Ethereum is on the SKN3X reference list of established chains
- Listed as a stablecoin, but multi-exposure or IL risk per DeFiLlama — or not reported by DeFiLlama
- Rewards above 50% of APY
- Protocol curve-dex is on the SKN3X reference list (allowlist)