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

Moody's Analytics is launching a new stablecoin service that uses AI to predict potential depeggings “within a 24-hour time horizon,” providing real-time insights into the liquidity and stability of stablecoin issuers.

The stablecoin market is becoming stable, Moody's noted in the November 6 announcement to launch the digital asset index.

So far By 2023, there were 1,914 depeggings, of which 609 were fiat-backed large-cap stablecoins. This compares to 2,847 in all of 2022, of which 707 were large caps. While some correlation to rising interest rates can be seen, several coin-specific factors can also be found, Moody's said.

Moody's DAM tracks 25 fiat-backed stablecoins representing more than 92% of the cryptocurrency market capitalization. They include Tether (USDT), USD Coin (USDC), and PayPal Coin (PYUSD). According to the website, additional stablecoins will be included in the service over time:

“Digital Asset Management (DAM) is a machine learning model that combines supply chain data, financial statements and economic indicators.”

In addition to identifying the risks of reducing the service, it also shows “the volatility of the stolkcoin market and liquidity, the stability of the stolkcoin issuer, the custodians holding the stolkcoin assets, and the quality of these reserves.” Additionally, it provides a “transparency index that highlights the quality of disclosures by the entities behind these fiat-backed stablecoins.”

Related: AI and blockchain will ‘shape sectors' and create new markets from scratch – Moody's

“The tool was developed using agile-development frameworks to meet customer needs in one year,” Moody's Analytics' senior director of product innovation Yannis Jokas said in the announcement.

In the year By 2023, Moody's Analytics reported 609 examples of switching between fiat-backed stablecoins, Debugging is down from 707 in 2022 with fiat pegs trading at more than 3% per day, highlighting the volatile nature of the sector.

Source pic.twitter.com/EEv7MXa9CR

— PakoCrypto₿ox (@PakoCryptoBox) November 6, 2023

Reports that the company is preparing the new service appeared at the beginning of the year. Moody's Analytics is a separate company from Moody's Ratings. He regularly comments on the market of crypto assets.

Journal: Unstable Coins: Debasement, Bankruptcy and Other Risks Looming.