Stablecoin Peg Wobble Highlights Systemic Risk
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World Liberty Financial's USD1 stablecoin experienced a brief but notable deviation from its $1 peg on February 23, dropping to $0.994 before recovering within minutes. This 0.6% slippage is significant for a token with over $5 billion in circulation and backing from dollars and government money market funds, raising questions about the resilience of even well-established stablecoins during market stress.
Analysis suggests the wobble resulted from a coordinated attack, compounded by concerning concentration risk: a single exchange reportedly holds 93% of the token's supply. This incident underscores the vulnerability of stablecoins to market manipulation and liquidity constraints, particularly when supply is heavily centralized. While the rapid recovery demonstrates some robustness, it highlights systemic risks that could impact broader crypto market stability during periods of volatility.
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