Flows and Usage of Stable Coins during Crises: A Comparative Analysis
Prof. Ye WANG
Assistant Professor
Department of Computer and Information Science, FST, UM
Date: 01 November 2023 (Wednesday)
Time: 13:00 to 14:00pm
Venue: FBA Lobby
Moderator: Prof. Tony Zhenjiang QIN, Associate Professor in Finance
Abstract
We construct a novel and unique data set of transaction-level data of eight major stablecoins to comprehensively examine trading activities during stress events within the stablecoin ecosystem. Our study encompasses a sample period that spans four significant crisis events, including the Terra-Luna collapse, the FTX failure, the Binance USD issuance halt, and the Silicon Valley Bank failure which impacted the stablecoin USDC. Our analysis reveals some common patterns across these crises. Although the Terra Luna and FTX shocks affected a broad range of stablecoins and activities, we find that contrary to anecdotal beliefs, these crypto shocks did not result in a systemic flight to safety from stablecoin assets to fiat currencies. Rather, we observe substitution effects between stablecoins, wherein investors pivot from riskier stablecoins to safer alternatives with similar functionalities. We identify a redistribution of stablecoin usage, characterized by outflows from riskier activities towards more secure channels. Our empirical study reveals that the Binance and the Silicon Valley bank banking stress events primarily affected the particular stablecoin involved (i.e. BUSD and USDC, respectively) with rival stablecoins gaining market share.
Speaker
Ye Wang is an Assistant Professor in the Department of Computer and Information Science and the Asia-Pacific Academy of Economics and Management at the University of Macau. He earned his Ph.D. and M.S. from ETH Zurich and his B.S. from Peking University. His current research interest is in blockchain, human-computer interaction, and security, with his research featured in top-tier venues such as AER P&P, WINE, S&P, CHI, WWW, and CSCW. He has also contributed as a PC/AC member at various esteemed conferences including CHI, WINE, and FC.
All are welcome!
