Stablecoins are one of the cornerstones of the crypto world. They’ve attracted significant attention over the past few years, ranging from Wall Street to kitchen table investors, and even the White House. As a less volatile alternative to crypto-assets like bitcoin, stablecoins have the potential to change the way we make payments, unlock the groundwork needed for more blockchain-based applications, and even reorient the economy toward private money. But how stable are these stablecoins, really? Can they be relied upon in the way their many proponents claim? And how much of the popular beliefs about stablecoins match their realities? That’s where we come in. In this Article, we show, for the first time, just how unreliable and unstable this latest crypto innovation really can be.

This Article makes two important contributions to the legal literature. First, the few and nascent works on stablecoins provide an imperfect and overly simplistic descriptive account of this market. Here, we explain the diversity of business models and issuer configurations that characterize the stablecoin landscape. But setting forth this taxonomy is more than merely upgrading descriptive accounts—creating this world map is critical to understanding the various cracks in the stablecoin market and the ways coinholders are likely to suffer harm when a stablecoin collapses.

Second, through our novel study of key underlying documents, such as stablecoin issuer corporate records, audit reports, protocol white papers, and user terms of service, this project reveals just how vulnerable stablecoin holders really are as they place their hopes (and sometimes their life savings) in this opaque and fragile market, rife with contradictory claims. In doing so, we break new ground by providing the first comprehensive private law analysis of stablecoins, including a menu of private ordering solutions aimed at creating transactional structures that would better protect stablecoin holders. By complementing the financial regulation and public law analysis in this nascent field, we lay the foundation for more inclusive and balanced normative solutions.