Cheery Rusty Marmot
High
Failure to properly peg the stablecoin to a fiat currency (e.g., USD or EUR) leads to potential market instability, with the token value drifting from its intended anchor value, causing losses for investors and undermining the token's utility as a stable medium of exchange.
The vulnerability arises from the lack of a robust pegging mechanism that adjusts token supply relative to market demand to maintain parity with a fiat currency. This deviation undermines confidence in the token’s stability and increases risks for users seeking a reliable store of value.
- The contract lacks automated supply control to maintain the token’s value around a fiat peg.
- No mechanisms to monitor the market price in real-time and adjust supply through minting or burning operations.
- Users trust the token as a stable asset, assuming it is pegged, and rely on its intended 1:1 value with a fiat currency.
No response
- The absence of a pegging mechanism allows market participants to influence the token’s price on external exchanges.
- As the token value fluctuates, speculative traders can exploit these price differentials by buying at a low price and selling at a high one.
- Without corrective peg adjustments, these fluctuations can lead to significant price instability.
- Loss of user trust in the stablecoin as a reliable store of value due to significant price volatility.
- Increased risk of arbitrage exploitation, leading to potential losses for unsuspecting users and investors.
No response
Integrate price oracle feeds to monitor and adjust token value in relation to the target fiat currency.