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Market Structure & Adoption

Concentration, competition, issuer economics and adoption.

6 of 33 indexed papers · the whole library

Paper Venue Year
What Keeps Stablecoins Stable? Richard K. Lyons, Ganesh Viswanath-NatrajEmpirical study of the arbitrage mechanism that holds fiat-backed stablecoins near their peg.
Key findings
  • Peg deviations are corrected mainly through the primary market (mint/redeem by authorized participants).
  • Access to primary-market arbitrage strengthened peg stability over time.
 Journal of International Money and Finance (NBER WP 27136) Top-tier journal 2023
Cryptocurrencies and Decentralized Finance (DeFi) Igor Makarov, Antoinette SchoarSurvey of crypto and DeFi market structure, including the central role of stablecoins as settlement assets.
Key findings
  • Stablecoins are the primary settlement and collateral asset across crypto and DeFi.
  • DeFi remains highly interconnected and reliant on a few large stablecoins.
 Brookings Papers on Economic Activity (NBER WP 30006) Top-tier journal 2022
The instability of stablecoins Kun Duan, Andrew UrquhartThis paper examines the stability of the five largest stablecoins by market capitalization using fractional time series analysis. It finds strong evidence of instability among these stablecoins, with varying correction speeds.
Key findings
  • There is strong evidence of instability of stablecoins.
  • Deviations from the $1 mark are gradually corrected at different speeds for all stablecoins except for DAI.
  • DAI's deviations do not converge in the long-run due to non-stationarity.
  • BUSD is the most stable stablecoin with the fastest correction speed.
 Finance research letters 2022
How stable are stablecoins? Lai T. Hoang, Dirk G. BaurThis paper analyzes the stability of stablecoins and proposes a framework to test for their stability. It finds strong evidence of excess price variations and suggests that stablecoins play a key role in cryptocurrency markets.
Key findings
  • There is strong evidence of excess price variations in stablecoins.
  • Stablecoin returns, volatility, and volumes are highly correlated with Bitcoin time-series.
  • Stablecoins increase the trading volume of Bitcoin.
 European Journal of Finance Top-tier journal 2021
Is Bitcoin Really Untethered? John M. Griffin, Amin ShamsA high-profile empirical study associating Tether (USDT) issuance with support of Bitcoin prices during the 2017 run-up.
Key findings
  • Finds patterns consistent with Tether being issued and used to support Bitcoin prices during downturns in 2017.
  • Raises questions about whether issuance was fully backed by reserves.
  • Became foundational to concerns about stablecoin reserve transparency and market impact.
 The Journal of Finance, Vol. 75(4) Top-tier journal 2020
The Rise of Digital Money Tobias Adrian, Tommaso Mancini-GriffoliIntroduces a taxonomy of money and argues privately issued digital money (e-money / stablecoins) could rapidly displace bank deposits.
Key findings
  • Proposes a taxonomy distinguishing e-money/stablecoins from bank deposits and central-bank money.
  • Adoption of e-money could be rapid via network effects and erode bank deposit funding (disintermediation).
  • Coins the risk of 'digital dollarization' in economies with weak currencies.
 IMF FinTech Note No. 19/01 2019
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