What Market Conditions Typically Initiate a Stablecoin Death Spiral?

A death spiral is often initiated by a sudden, large-scale market downturn, particularly in the cryptocurrency market. This leads to mass liquidation events and a general flight to safety, causing significant selling pressure on the stablecoin.

If the selling pressure exceeds the protocol's ability to absorb it by burning stablecoins and issuing its volatile token, the spiral begins.