#StablecoinLaw

an explanation of "Stablecoin low" according to various possible contexts:

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🔹 1. A stablecoin below 1 $ (loss of its peg)

Stablecoins like USDT, USDC, or DAI are supposed to be worth exactly 1 dollar. If they drop below 1 $ (for example, $0.97), it may indicate:

🔻 A loss of confidence or a liquidity crisis

📉 An imbalance between supply and demand

⚠️ A reserve issue (like what happened to TerraUSD (UST) in 2022)

👉 This can be dangerous, especially if the stablecoin is algorithmic or poorly backed.

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🔹 2. Low yield on stablecoins

You may have been referring to the low yields (APY) currently offered on stablecoins, whether on:

deFi platforms (like Aave, Curve, Lido…)

or CeFi (like Binance Earn, Nexo, Bybit…)

🪙 Example:

In 2021–2022, one could obtain 10% or more.

In 2024–2025, many platforms offer only 2 to 4% (or even less), due to:

a decline in loan demand

a more stable market, hence less risky

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🔹 3. Decline in stablecoin market capitalization

Another meaning of "stablecoin low" can be a decline in their total market capitalization. This often reflects:

a massive withdrawal of investors towards fiat currencies (cash out)

a unfavorable regulation

or a decrease in DeFi activity

📉 Example: After the regulatory issues surrounding BUSD in 2023, its market capitalization collapsed.