Based on a study by the National Institute of Standards and Technology (NIST), the top five stablecoins that could sustain their peg to a fiat currency represent 87% of the total top 20 coins by market capitalization. Tether (USDT), USD coin (USDC), Binance (BUSD), Dai (DAI), and Frax (FRAX) are the top 5 stablecoins based on market capitalization that managed to maintain their pegs, according to the draft report released by NIST.
NIST is a non-regulatory agency of the United States Department of Commerce which highlighted various security considerations concerning the architecture and implementation of stablecoins.
All the coins mentioned above are pegged to the US dollar and have maintained an average minimum value of $.9934 (-0.66 %), and the lowest value recorded was$.9871 (-1.29 %) throughout the study.
NIST worries that stablecoin system developers, maintainers, and managers might take advantage of their privileged position to deceive investors and holders, given the trust in stablecoin issuers. The agency concluded that two stablecoins that operate essentially identically in third-party markets and allow for purchasing and selling products using coins at a pegged price might have radically different risk profiles.
TerraUSD (UST), the third-largest stablecoin by market value at the time of the study, which lost its peg in May 2022, was also noted by NIST as being in a dark hole. The paper mentions a number of security issues, such as collateral theft, intelligent contract weaknesses, data oracles, illegal mining, and manipulating the supporting blockchain.
The agency also claims that decentralized finance (DeFi) is typically more vulnerable to security issues due to growing smart contract code complexity and critical functionality, and centralized finance (CeFi) structures are typically more highly susceptible to trust issues due to a greater dependence on human trust.