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Edited by Ritu77 at 23-12-2023 07:00 PM
Moody's Analytics, the financial intelligence and analysis company under the international credit rating agency Moody's, officially announced the launch of an "AI-driven Digital Asset Monitoring Tool (DAM)" in a statement issued on November 6. This tool can predict the decoupling of stablecoins in real-time.
The statement mentioned that, as of September this year, a total of 1,914 decoupling events were recorded, with major market cap stablecoins (including the top five by market cap, such as DAI) accounting for 609 events. In comparison, there were 707 decouplings of major market cap stablecoins and a total of 2,847 decouplings throughout the entire year of 2022. The company defines stablecoin decoupling as a price fluctuation exceeding 3% against its fiat-pegged price within a day.
According to Moody's, in 2022, several notable decoupling events occurred with the rise in interest rates, and this trend repeated in March 2023. Moody's statistical data reveals that decoupling has become commonplace for stablecoins, driven by both macroeconomic factors and specific characteristics of the currencies.
Therefore, DAM analyzes various data to predict the risk of stablecoins decoupling from their fiat-pegged currencies within the next 24 hours. The initial version of DAM monitors 25 major fiat-backed stablecoins, including well-known ones like Tether, USDC, and PayPalCoin, which represent over 92% of the total stablecoin market value and are mostly backed by mainstream fiat currencies. The platform plans to gradually add more digital assets to its monitoring.
Yiannis Giokas, Senior Director of Product Innovation at Moody's Analytics, stated that the stablecoin market has developed into a significant asset class worth billions of dollars, constituting about 10% of the cryptocurrency market and serving as a core element in most on-chain transactions.
"However, given the ongoing volatility of stablecoins, customers have strongly requested a comprehensive digital asset risk assessment tool (to capture their potential decoupling), and DAM is built for this purpose."
To use DAM, one can access it through API or WebApp after subscribing, and there's an option to request a demonstration.
Mechanism of DAM Operation:
According to the statement, DAM is a machine learning model capable of comprehensively assessing on-chain and off-chain risk factors. It analyzes public information and proprietary data within Moody's to provide a comprehensive risk assessment of decentralized financial assets such as stablecoins. DAM covers various types of risks in monitoring fiat-backed stablecoins:
Issuer risk: Examines the reliability of the entity issuing the stablecoin.
Market risk: Monitors intraday volatility compared to traditional fiat.
Liquidity risk: Evaluates market depth to ensure investors do not face illiquidity.
Custodian risk: Assesses the credibility of institutions holding the reserves of stablecoins.
Reserve risk: Conducts a quality assessment of reserves based on asset volatility and risk.
Additionally, the system will include a transparency metric to evaluate the quality of information publicly disclosed by stablecoin issuers, such as financial proofs.
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Post time 12-11-2023 12:22:36