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Are the stabilities of stablecoins connected?

Author

Listed:
  • Binh Nguyen Thanh

    (RMIT University)

  • Thai Nguyen Vu Hong

    (RMIT University)

  • Huy Pham

    (RMIT University)

  • Thanh Nguyen Cong

    (Ho Chi Minh City University of Economics and Finance (UEF))

  • Thu Pham Thi Anh

    (RMIT University)

Abstract

This study analyzes the interconnection of the stability of prominent stablecoins including Tether (USDT), USD Coin (USDC), Paxos Standard (PAX), TrueUSD (TUSD) and DAI from 23/11/2019 to 1/04/2021. We find (i) market price fluctuations vary across stablecoins, (ii) instabilities in USDT and USDC significantly drive those of other stablecoins but less convincing evidence for the reverse impact, and (iii) that increases (decreases) in USDT market prices significantly depress (raise) the market prices of the other stablecoins. Interestingly, the algorithmic stablecoin, DAI, is found to be less stable than its USD-backed counterparts.

Suggested Citation

  • Binh Nguyen Thanh & Thai Nguyen Vu Hong & Huy Pham & Thanh Nguyen Cong & Thu Pham Thi Anh, 2023. "Are the stabilities of stablecoins connected?," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(3), pages 515-525, September.
    • Handle: RePEc:spr:epolin:v:50:y:2023:i:3:d:10.1007_s40812-022-00207-3
    DOI: 10.1007/s40812-022-00207-3
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    1. Douglas Cumming & Zachary Glatzer & Omrane Guedhami, 2023. "Institutions, digital assets, and implications for economic and financial performance," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 50(3), pages 487-513, September.

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