Bank run
run on the bankredemption run
Coordinated mass redemption that exhausts an issuer's liquid reserves before all holders can be paid.
Bank-run risk for stablecoins is real even when reserves are nominally 1:1, because a portion of reserves typically sits in instruments (T-bills, money-market funds, bank deposits) that cannot all be liquidated same-day at par. The March 2023 USDC depeg was triggered by a $3.3B reserve exposure to Silicon Valley Bank — redemptions briefly overwhelmed primary-market liquidity.
Related terms
- DepegA stablecoin trading materially away from its target price ($1 for USD-pegged stables) on a primary venue.
- RedemptionExchanging a stablecoin back to its underlying claim (USD, ETH collateral, USDC at a PSM).
- Liquidity riskThe risk you cannot exit a position at a fair price within a desired timeframe.
- ReservesThe assets backing a stablecoin's outstanding liabilities — for fiat-backed stables, predominantly cash + Treasuries.