Tail risk
The risk of rare, large-loss events sitting in the far end of the return distribution — typically underestimated by short-window historical models.
Stablecoin tail risk includes depegs, issuer insolvency, prolonged perp-funding inversion, oracle manipulation, and bridge exploits. The StableLens risk model deliberately weights tail-risk inputs more heavily than historical-return summaries because the relevant return distributions are fat-tailed.
Related terms
- DrawdownPeak-to-trough loss over a window — the headline measure of strategy-level downside risk.
- DepegA stablecoin trading materially away from its target price ($1 for USD-pegged stables) on a primary venue.
- ContagionThe propagation of stress from one entity / asset to another via balance-sheet, lending, or confidence linkages.