A stablecoin is designed to maintain a stable value, usually linked to an underlying asset such as the US dollar. When a stablecoin decouples from its reference value, it means that its price fluctuates outside of its intended range, which can create uncertainty among users. If a stablecoin frequently delinks, this indicates that it is not adequately meeting its stability objective, which represents a significant risk for those who use it to hedge against market volatility.
A stablecoin that becomes unlinked may be suffering from backing or market confidence issues. In these cases, users may lose confidence in the currency and seek more stable alternatives, which could negatively affect projects that rely on that stablecoin.
A stablecoin is designed to maintain a stable value, usually linked to an underlying asset such as the US dollar. When a stablecoin decouples from its reference value, it means that its price fluctuates outside of its intended range, which can create uncertainty among users. If a stablecoin frequently delinks, this indicates that it is not adequately meeting its stability objective, which represents a significant risk for those who use it to hedge against market volatility.
A stablecoin that becomes unlinked may be suffering from backing or market confidence issues. In these cases, users may lose confidence in the currency and seek more stable alternatives, which could negatively affect projects that rely on that stablecoin.