SuperEx Educational Series: Stablecoin Attack Types — The Most Dangerous, Most Underestimated Financial Warfare in Crypto

Stablecoins Carry the "Settlement Layer" Function

Stablecoins are not merely assets; they are the "trading engine" of the crypto market. Attacking a stablecoin is equivalent to draining the "fuel tank" of the financial system. Their importance stems from several key functions:

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  All trading pairs are priced in stablecoins.
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  All capital flows are settled through them.
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  All risk assets measure value against them.
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  All long and short positions use them as margin.
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  All CeFi and DeFi lending protocols treat them as base assets.

A loss of confidence in a stablecoin leads to an immediate collapse in market tradability, affecting more than just a single asset.

Stablecoin Attacks Get "High-Speed Amplification" On-Chain

Unlike traditional finance, which has regulatory safeguards, circuit breakers, and central bank interventions, the crypto market experiences rapid amplification of stablecoin failures. When a stablecoin breaks:

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  On-chain liquidation bots trigger automatically.
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  Lending protocols initiate forced liquidations.
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  Automated Market Maker (AMM) pools experience instant slippage.
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  Bridges are rapidly drained through arbitrage spreads.
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  Short sellers further suppress stability.
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  The market enters a large-scale "de-peg" stampede.

These attacks are exponential on-chain financial assaults—fast, impactful, and broadly transmitted, creating a chain reaction that few financial systems can withstand.

Stablecoins Have Extreme Information Asymmetry

Attackers exploit significant information asymmetries inherent in stablecoin structures. These include:

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  Opaque reserve assets.
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  Delayed disclosure of financial information.
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  Vague custody banking details.
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  Operating within regulatory gray zones.
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  Audits that lag behind asset changes.
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  Risk-asset exposure that is not readily assessable by outsiders in real-time.

This environment makes stablecoins particularly vulnerable to simultaneous "information warfare" and "capital warfare."

Type 1: Market Attack

This is a combined "information war" and "financial war" strategy utilizing short selling and narrative pressure. It is the most common, least costly, and potentially highest-return approach. Typical tactics involve:

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  Shorting assets related to stablecoin reserves (e.g., Bitcoin, bonds) with significant capital.
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  Coordinating media or institutions to disseminate narratives of "insufficient reserves, de-peg, or bankruptcy risk."
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  Generating panic on social platforms to instigate panic-driven redemptions.
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  Artificially creating slippage in AMM pools to increase the probability of a de-peg.
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  Closing short positions for profit as panic sentiment amplifies.

This is a financial and psychological attack, not a technical one. A notable historical example includes USDT being repeatedly targeted by financial institutions, with reports suggesting involvement from hedge funds like Citadel.

Type 2: On-chain Bank Run Attack

This method involves rapidly draining liquidity from AMM pools and lending protocols, proving extremely brutal due to the inherent fragility of on-chain liquidity. The main steps include:

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  Attackers pre-positioning large amounts of funds.
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  Dumping massive quantities of stablecoins into liquidity pools.
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  Causing significant price slippage.
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  Triggering arbitrageurs, bots, and algorithms to sell automatically.
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  Hollowing out AMM pools.
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  Squeezing bridge liquidity.
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  Initiating systemic liquidations across on-chain protocols.

No stablecoin, including USDT, USDC, DAI, FRAX, and GUSD, is immune to AMM bank run attacks, which are essentially "whale-level capital warfare."

Type 3: Bridge-Based Attack

Attacks through cross-chain bridges can cause instant price de-pegging. Bridges are often targets for hackers due to their complex infrastructure. Attack methods include:

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  Directly attacking bridge smart contracts.
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  Forging cross-chain messages by exploiting weak light-client verification.
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  Creating de-pegging through bridge liquidity pool pricing mechanisms.
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  Attacking the bridge's oracle to tamper with exchange prices.

When a bridge is compromised, a stablecoin on one chain can de-peg from mainnet prices. Inter-chain arbitrageurs will then rapidly drain liquidity, escalating the issue from a "local de-peg" to a "network-wide de-peg." The inherent "single-point-of-failure" nature of bridges makes them a persistent vulnerability.

Type 4: Oracle Manipulation

Oracle manipulation involves tampering with price sources to provide a stablecoin with a false price. This is effective because many stablecoin collateral systems rely on oracle feeds, such as DAI (MakerDAO), FRAX, USDD, LUSD, and various on-chain stable pools. The attack flow typically involves:

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  Manipulating AMM prices.
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  Feeding false data through the oracle.
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  Causing lending protocols to misread collateral values.
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  Massively minting stablecoins based on false collateral values.
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  Draining the collateral.
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  Resulting in the stablecoin losing its peg.

This represents a classic combined "on-chain quant attack" and "oracle-layer weakness" operation.

Type 5: Reserve Attack

This is a real-world financial offensive targeting centralized stablecoins like USDT, USDC, and TUSD. Attackers may:

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  Short their reserve assets (e.g., Treasuries, Bitcoin, gold).
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  Question the transparency of reserves.
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  Expose internal compliance risks.
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  Utilize rating agencies and regulatory pressure to create tension.
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  Induce redemption runs.

The critical aspect is that this attack occurs on a real-world financial battlefield, exploiting sentiment and compliance pressures rather than code vulnerabilities.

Type 6: Audit & Information War

This attack style weaponizes information asymmetry to destroy a stablecoin through public opinion. Attackers may:

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  Forge "leaked audit reports."
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  Spread narratives of "reserve violations."
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  Cite ambiguous regulatory statements to intimidate holders.
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  Fabricate rumors of "bank accounts frozen."
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  Mass-produce FUD (fear, uncertainty, doubt) narratives.

In the current social media landscape, stablecoin holders are highly sensitive. Even minor rumors can trigger sell-offs, allowing attackers to wage "psychological warfare" at minimal cost.

Type 7: Regulatory-Induced Attack

While regulators are not direct attackers, their policies can inadvertently create "attack effects." Proposed regulations, such as requirements for banking licenses, 100% cash reserves, prohibitions on high-risk assets, public audits, and disclosure of custody banks, can trigger panic. This panic can lead to on-chain bank runs, making stablecoins direct targets. Short-selling institutions often synchronize their actions with regulatory pronouncements, effectively turning regulation into an "attack amplifier."

Trend 1: Stablecoins Are Now Large Enough to Affect the Global USD System

With a combined market capitalization exceeding $200 billion for USDT and USDC, and significant on-chain usage of stablecoins like DAI, they are large enough to influence cross-border capital flows. Their increasing importance makes them more attractive targets.

Trend 2: Stablecoins Are Becoming a "Global Liquidity Black Hole"

Stablecoins have evolved into critical components of the financial ecosystem, serving as:

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  Major overseas buyers of U.S. Treasuries.
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  The settlement layer for crypto markets.
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  Tools for capital refuge.
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  USD substitutes in emerging markets.

Assets with such profiles possess extremely high "attack value."

Trend 3: Traditional Financial Institutions Are Starting to Participate in Short Attacks

Macro capital has recognized that stablecoins are not only attackable but that such attacks can be highly profitable. This realization is likely to draw more traditional financial institutions into the "stablecoin sniper market."