How Does a Stablecoin De-Pegging Event Affect the Insurance Fund? ▴ Learn

How Does a Stablecoin De-Pegging Event Affect the Insurance Fund?

A stablecoin de-pegging event, where the stablecoin loses its $1 peg, reduces the effective purchasing power of the insurance fund if it is held in that stablecoin. If the fund is meant to cover a deficit in USD terms, a de-pegged stablecoin will not be able to cover the full amount, potentially leading to a shortfall and the need for ADL.

What Is a De-Pegging Event for a Stablecoin and What Are Its Consequences for an LP in a Stablecoin Pool?

What Is ‘Auto-Deleveraging’ (ADL) and How Is It Used by Crypto Exchanges?

What Is “Auto-Deleveraging” (ADL) and How Does It Function in High-Leverage Crypto Exchanges?

What Is the Difference between “Auto-Deleveraging” and Using an Insurance Fund?