Moody’s unveils service that uses AI to predict stablecoin depeggings

Schematic of Moody’s Digital Assets Monitor

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 (DAM).

So far in 2023, there have been 1,914 depeggings, 609 of which were fiat-backed large-cap stablecoins. This compares with 2,847 in all of 2022, 707 of which 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 the total stablecoin market capitalization. They include Tether, USD Coin and PayPal Coin. More stablecoins will be incorporated into the service in time, according to its website:

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.”

“The tool was built in a year using agile-development frameworks to address customer needs,” Moody’s Analytics’ product innovation senior director, Yiannis Giokas, said in the announcement.

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