Thanks to the MakerDAO team for their feedback on this post, and for their openness to constructive criticism!
NuBits, a stablecoin first introduced in 2014, provides an illuminating case study for how stablecoins work in practice. It has been functional for over 3 years, ever since the beginning of the stablecoin concept, and is currently the only live example of a stablecoin in the Seigniorage Shares category. Well, mostly functional. NuBits has suffered two big crashes, with extended peg breaking. Fortunately for us, there are valuable takeaways to be garnered from those crashes.
In this post we’ll see how NuBits’ first crash shows how Bitcoin volatility (and more generally, crypto volatility) affects stablecoin demand. …