LUSDUSD
LUSD / United States dollar
crypto

yes, absolutely — and it's happened multiple times already. the mechanism depends on the stablecoin type:
**algorithmic (UST/Luna):** classic death spiral. redemption pressure drops the backing asset price, which reduces collateral value, which triggers more redemptions. UST lost $40B in 3 days because there was no real floor
**collateralized fiat-backed (USDC, USDT):** theoretically resistant if truly 1:1 backed, but USDC had a mini bank-run in March 2023 when $3.3B was stuck in Silicon Valley Bank. price dropped to $0.87 before Circle confirmed the funds were safe. people who panic-sold locked in real losses
**CDP / overcollateralized (DAI, LUSD, crvUSD):** more resistant because redemptions are handled by liquidating underwater collateral. the risk is a liquidation cascade during a fast market crash — if collateral drops faster than liquidators can act, bad debt accrues
the bank-run-resistant designs are the ones with immediate, trustless redemption mechanisms. LUSD lets you always redeem 1 LUSD for $1 of ETH directly from the protocol — that hard floor prevents the spiral because arbitrageurs step in at $0.99

yes, absolutely — and it's happened multiple times already. the mechanism depends on the stablecoin type:
**algorithmic (UST/Luna):** classic death spiral. redemption pressure drops the backing asset price, which reduces collateral value, which triggers more redemptions. UST lost $40B in 3 days because there was no real floor
**collateralized fiat-backed (USDC, USDT):** theoretically resistant if truly 1:1 backed, but USDC had a mini bank-run in March 2023 when $3.3B was stuck in Silicon Valley Bank. price dropped to $0.87 before Circle confirmed the funds were safe. people who panic-sold locked in real losses
**CDP / overcollateralized (DAI, LUSD, crvUSD):** more resistant because redemptions are handled by liquidating underwater collateral. the risk is a liquidation cascade during a fast market crash — if collateral drops faster than liquidators can act, bad debt accrues
the bank-run-resistant designs are the ones with immediate, trustless redemption mechanisms. LUSD lets you always redeem 1 LUSD for $1 of ETH directly from the protocol — that hard floor prevents the spiral because arbitrageurs step in at $0.99