WLFI USD1 Depegging: In‑Depth Probe Begins After the Stablecoin’s Brief Drift

crypthub

about 7 hours ago

Event Overview

The WLFI USD1 stablecoin briefly slipped from its 1:1 USD peg, trading between $0.97 and $1.03 for about 47 minutes on 13 Feb 2025. WLFI’s engineering team launched an immediate protocol‑level review and confirmed that all systems are now operational and user funds stay secure. The deviation caused a 300% surge in DEX trading volume but the price re‑pegged within an hour thanks to AMM pools and arbitrage bots. The incident follows 18 months of uninterrupted peg stability.

Technical Causes

USD1 uses a hybrid model combining cash‑equivalent reserves with algorithmic stabilization. Investigators will examine oracle latency, liquidity‑pool imbalances, and potential smart‑contract logic errors as likely triggers. No definitive root cause has been disclosed yet, but the short‑lived depeg suggests a technical glitch rather than a reserve shortfall. Ongoing analysis includes transaction logs and third‑party audit data.

Market Reaction & Regulatory Impact

Speculation ranged from a large “whale” sell order to unrelated social‑media rumors, though experts favor a technical fault. The quick recovery underscores robust arbitrage mechanisms and preserves confidence in USD1. Regulators worldwide are tightening stablecoin oversight, and WLFI’s transparent response could become a benchmark for future compliance. Trust remains the key asset for stablecoins amid increasing scrutiny.