Depegging in bear market
When in extreme market conditions like a bear market with falling prices the stablecoin will face a lot of pressure that will make it hard to maintain its peg
Medium: In rapidly falling prices of WETH, WBTC a death spiral may ensue as there will be increase in undercollaterized loans, reduction in number active liquidators, whales and others taking short positions further fuelling the spiral down on the collateral and stablecoin and it will depeg
Manual Analysis
It is recommended the protocol have some emergency mechanisms in the case of bear markets or add more stabilization features e.g reserves, limits, caps, adjustable incentives and bonuses etc
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