Moody’s Analytics is launching a new stablecoin service that will use AI to predict probable depeggings “in a 24-hour time horizon” while providing real-time insights about stablecoin issuers’ liquidity and stability.
The stablecoin market is getting stabler, Moody’s observed in its Nov. 6 announcement for the launch of Digital Asset Monitor.
So far in 2023, there have been 1,914 depeggings, of which 609 were of fiat-backed large-cap stablecoins. This compares with 2,847 in all of 2022, of which 707 were large-cap. While some correlation to rising interest rates can be observed, a number of coin-specific causes can also be detected, Moody’s said.
Moody’s DAM will track 25 fiat-backed stablecoins that represent over 92% of total stablecoin market capitalization. They include Tether (USDT), USD Coin (USDC), and PayPal Coin (PYUSD). More stablecoins will be incorporated into the service in time, according to its website:
“Digital Asset Monitor (DAM) is a machine learning model that combines on and off chain data, financial statements and economic indicators.”
Besides identifying depegging risks, the service will indicate “the stablecoin’s market and liquidity dynamics, the stability of the stablecoin issuer, the custodians that hold the stablecoin’s assets, and the quality of these reserves.” In addition, 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
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Author: Derek Andersen
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