Only 14% of Stablecoins Survive, Says Deutsche Bank Research Report  (2024)

• Deutsche Bank Research analysts recently released a paper on stablecoins launched since 1800.
• The analysts conclude that most pegged coins failed, with only 14% surviving.
• Tether criticizes the researchers, claiming they failed to produce concrete data to support their arguments.

In a recent study, Deutsche Bank Research analysts concluded that most stablecoins failed, with only 14% surviving. Raising concerns regarding the future of stablecoins, the researchers posited, “Some may survive, although most will likely fail.”

Stablecoins are digital currencies pegged to another asset like fiat currency, gold, etc. As these types of currencies are stable, most investors depend on them in the highly volatile crypto market.

The analysts surveyed nearly 334 pegged currencies launched since 1800. They asserted that only a very few currently exist among the total stablecoins. They added that the successful stablecoins boasted three features that the failed stablecoins lacked: credibility, reserve backing, and tightly controlled systems.

As per the research, 49% of the stablecoins failed, existing only for 8 to 10 years. The analysts argued that “macroeconomic factors are key to determining a peg sustainability.” Marion Laboure, Senior Strategist at Deutsche Bank Research, stated, “Issues around governance and speculative forces could also indicate when there’s a possibility of de-pegging.” He added,

“We chose to compare stablecoins to peg currencies because historically their similarities make them a close proxy as both are pegged currencies. Both require ample reserves and credibility from issuers, are exposed to speculative forces, and the majority of both stablecoins and historical currency pegs track the USD.”

However, Tether, the issuer of stablecoin giant USDT, raised its voice against the Deutsche Bank Research report, claiming that the analysts failed to produce “concrete data” supporting their arguments. While the researchers pinpointed Terraform Labs’ TerraUSD as an example of the fall of stablecoins, Tether commented, “Its comparison to Terra, an algorithmic stablecoin, is misleading and irrelevant to the discussion on reserve-backed coins.”