SoK: Stablecoin Designs, Risks, and the Stablecoin LEGO

TL;DR

This paper provides a comprehensive analysis of stablecoin designs, risks, and security incidents, introducing the Stablecoin LEGO framework to systematically evaluate and improve stablecoin resilience and security.

Contribution

It offers a large-scale analysis of stablecoin research, incidents, and designs, and introduces the Stablecoin LEGO framework for risk assessment and resilience building.

Findings

Stability is an emergent, fragile state dependent on market confidence and liquidity.

Stablecoin designs involve trade-offs in risk rather than risk mitigation.

Security incidents act as evolutionary pressures shaping resilient designs.

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.