Avtar Sehra (@avtarsehra): Elevating Stablecoin Risk Taxonomy: Introducing NAD (Not A Depeg) for Operational Clarity

Elevating Stablecoin Risk Taxonomy: Introducing NAD (Not A Depeg) for Operational Clarity The rapid evolution of stablecoin infrastructure demands a more granular risk vocabulary. Calling every price deviation a “depeg” is imprecise and often fuels unnecessary panic, as took place over the weekend with Ethena. To enable the industry, from issuers to regulators, to better understand and react to volatility, we must collaborate on defining systemic vs. temporary risk. That’s why I propose a new term: NAD (Not A Depeg). NAD Events = temporary, non-systemic deviations These are usually driven by secondary market factors - thin liquidity, routing glitches, or market perception. Importantly, redemption mechanics + collateral backing remain intact. Two NAD categories: A. Local Secondary Deviation 1. Confined to one venue or pool 2. Caused by thin books, bad routing, or tech factors 3. Primary redemptions remain healthy 4. Example: USDe’s brief dislocation on a single venue (Oct ‘25) B. Global Secondary Deviation 1. Spread across multiple venues 2. Driven by perception/supply-demand imbalances 3. Still: primary redemptions fully functional 4. Example: GYEN at Coinbase - demand spike sent price above peg Now, contrast with True Depeg Events = primary market failures These are systemic, where redemption elasticity is compromised: C. Redemption Stress 1. Redemptions delayed/paused 2. Collateral intact, but time-risk grows 3. Example: USDC (Mar ‘23) during SVB fallout D. Collateral Failure 1. Underlying collateral itself is questioned or impaired 2. Primary health broken, peg can’t be defended 3. Example: Terra/Luna collapse (‘22) Stablecoins live and die by their peg. But not all deviations are equal. By distinguishing NAD (market-driven noise) from True Depeg (issuer-linked failure) we enable clearer communication for regulators, issuers, and users - and stronger confidence in the ecosystem. The full overview of this analysis is at the link below: https://t.co/y7xyRI14N5