SoK: Stablecoin Designs, Risks, and the Stablecoin LEGO

• URL: http://arxiv.org/abs/2506.17622v1
• Date: Sat, 21 Jun 2025 07:19:42 GMT
• Title: SoK: Stablecoin Designs, Risks, and the Stablecoin LEGO
• Authors: Shengchen Ling, Yuefeng Du, Yajin Zhou, Lei Wu, Cong Wang, Xiaohua Jia, Houmin Yan,
• Abstract summary: This SoK confronts this gap through a large-scale analysis of 157 research studies, 95 active stablecoins, and 44 major security incidents.<n>Our analysis establishes four pivotal insights: 1) stability is best understood not an inherent property but an emergent, fragile state reliant on the interplay between market confidence and continuous liquidity.<n>We introduce the Stablecoin LEGO framework, a quantitative methodology mapping historical failures to current designs.
• Score: 21.776152872113922
• License: http://arxiv.org/licenses/nonexclusive-distrib/1.0/
• Abstract: Stablecoins have become significant assets in modern finance, with a market capitalization exceeding USD 246 billion (May 2025). Yet, despite their systemic importance, a comprehensive and risk-oriented understanding of crucial aspects like their design trade-offs, security dynamics, and interdependent failure pathways often remains underdeveloped. This SoK confronts this gap through a large-scale analysis of 157 research studies, 95 active stablecoins, and 44 major security incidents. Our analysis establishes four pivotal insights: 1) stability is best understood not an inherent property but an emergent, fragile state reliant on the interplay between market confidence and continuous liquidity; 2) stablecoin designs demonstrate trade-offs in risk specialization instead of mitigation; 3) the widespread integration of yield mechanisms imposes a "dual mandate" that creates a systemic tension between the core mission of stability and the high-risk financial engineering required for competitive returns; and 4) major security incidents act as acute "evolutionary pressures", forging resilience by stress-testing designs and aggressively redefining the security frontier. We introduce the Stablecoin LEGO framework, a quantitative methodology mapping historical failures to current designs. Its application reveals that a lower assessed risk strongly correlates with integrating lessons from past incidents. We hope this provides a systematic foundation for building, evaluating, and regulating more resilient stablecoins.

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