# W05 Lab Guide: Stablecoins in Practice ## Workshop Overview **Duration:** 90 minutes (40 lecture + 25 notebook + 20 simulation + 5 buffer) **Difficulty:** Intermediate, accessible cold-read for non-specialists **Tools:** Browser, Excel or Google Sheets, optional Jupyter notebook **Network:** Not required for the workshop activities ## Prerequisites Checklist - [ ] You can open and read a Jupyter notebook - [ ] You can type a value into a spreadsheet cell - [ ] No prior stablecoin knowledge required (the lecture builds it from zero) - [ ] Optional: read the trimmed primer (`handouts/w05_stablecoins_primer.pdf`) before class ## Learning Objectives By the end of W05 you will be able to: 1. Identify the three stablecoin design families (fiat-backed, crypto-collateralized, algorithmic) and place common stablecoins (USDT, USDC, DAI, UST) into the correct family. 2. Define peg, redemption, reserve, attestation, audit, depeg, arbitrageur, issuer, and collateral in plain English. 3. Read a peg-deviation time series, identify both the depeg event and the recovery, and name at least one mechanism that drove the recovery. 4. Argue both sides of the Tether transparency debate by stating two strongest defense points and two strongest critique points. 5. Predict whether a market shock (custodian rumor, regulator probe, large redemption) will move the peg, and justify the prediction using the bank-deposit analogy. --- ## Part 1: Lecture (40 minutes) You will be in your seat with a printed deck or your laptop showing the slides. Your job: - Listen for the four polls. Vote with show-of-hands or Mentimeter. - Take note of any term you do not recognize on the glossary slide. - Predict before the reveal on the predict-beat slides. - Stay through the recovery slides. Failure cases always end with how the peg came back; do not leave at the failure beat. > **Discovery question (write your guess before the lecture):** What do you think keeps the price of a stablecoin at one dollar? Reserves, market makers, regulation, hope, or something else? Write your guess: ___________ ### Checkpoint after the lecture - Did the bank-deposit analogy land for you? - Were you persuaded by the Tether steelman, the critique, or neither? - What surprised you about the USDC March 2023 case? --- ## Part 2: Workshop W-A, Notebook Analytics (25 minutes) ### Step 1: Open the notebook Find `notebooks/W05_stablecoin_depeg.ipynb` in your course folder. Open it in Jupyter (or VS Code with the Jupyter extension, or Google Colab if you upload the folder). If you cannot run the notebook, raise your hand. The facilitator will give you a printed paper fallback (`paper_fallback/w_a_paper_fallback_handout.pdf`) that runs the same exercise on paper. ### Step 2: Run cells C0 to C6 with the facilitator The facilitator will pace the room through the cells on the projector. Each cell takes roughly 2.5 minutes. Your job: - Run the cell on your own laptop after the facilitator runs it on the projector - Read the output - Be ready to answer the checkpoint question > **Discovery question:** Cell C5 plots USDC and USDT. Before you look, predict: how much did USDT move during the USDC depeg week? More than 0.5%? Less? Why? ### Step 3: Reflection cells C7 and C8 (5 minutes) Cell C7 asks you two questions. Type your answers in cell C8. You have 5 minutes. Be brief. One sentence per answer is enough. ### Step 4: Summary cell C9 (1 minute) Run cell C9 with the facilitator. The output is your one-line takeaway. Write it down (on paper or in the notebook) before closing your laptop for Part 3. ### W-A success criteria - [ ] You ran cell C9 and saw the summary table - [ ] You answered both reflection questions in cell C8 - [ ] You can state, in one sentence, when USDC troughed and when it recovered --- ## Part 3: Workshop W-B, Peg Defense Simulation (20 minutes) ### Step 5: Get your role card The facilitator will hand out 5 role cards. You will be in a group of 2-6 students assigned one of: - Issuer / Treasury - Authorized Market Maker - Large Holder (whale) - Panic Retail - Regulator / Press Each card explains your mission, tools, and constraints. You also have a quiet-participation opt-out: if you prefer not to speak in front of the group, write your decisions on a card and hand them to your team lead. ### Step 6: 30-second explainer The facilitator reads the explainer slide aloud. The peg deviation is computed each round from the actions everyone takes plus an exogenous shock. ### Step 7: Three shock rounds (5 min each) Each round runs: - 3 minutes caucus (your group decides what to do) - 1 minute enter actions (your team lead types in the spreadsheet) - 1 minute compute and announce (facilitator reads the peg outcome) The shocks (in order): 1. Round 1: Custodian bank failure rumor (no facts, just speculation) 2. Round 2: Regulator probe (the issuer cannot mint this round) 3. Round 3: Large redemption request (the issuer must choose: honor, queue, or reject) > **Discovery question:** Before round 1, predict: which round do you think will break the peg, if any? Why? ### Step 8: Debrief (3 minutes) The facilitator asks 5 questions. Be ready to answer one of them in front of the group. The closing line is the takeaway: "Every stablecoin is one of these games, played for real money." ### W-B success criteria - [ ] Your group submitted an action in all 3 rounds - [ ] You can state the round-end peg flag (Green/Yellow/Red) for each of the 3 rounds - [ ] You can connect at least one round to the bank-deposit analogy --- ## Evaluation W05 is not graded. The evaluation below is for self-assessment and for the facilitator's pedagogy-quality check. ### Self-assessment - I can place USDT, USDC, DAI, and UST into the correct stablecoin family. (LO1) - I can define attestation and audit and explain why they differ. (LO2) - I can describe the USDC March 2023 depeg AND its recovery in 3 sentences. (LO3) - I can argue both the Tether steelman and the critique without using value-loaded language. (LO4) - I can predict the direction of peg movement under a market shock and justify it. (LO5) ### Pedagogy-quality items (Patch 12, for facilitator review) These items go beyond compliance with the prompt. They test whether the workshop actually worked as intended. - [ ] **Analogy persuasiveness.** Did the bank-deposit analogy land for the room, or did it feel forced? If forced, where? (Track via show-of-hands at the end: "raise hand if the bank-deposit analogy was helpful for you"). - [ ] **Steelman honesty.** Was the Tether steelman strong enough that a student who started favoring the critique was momentarily persuaded? (Track via Poll 4 results.) - [ ] **Glossary completeness from row 14.** Did any student in the back of the room flag a term they did not understand? (Mark unflagged terms as effective; mark flagged terms for revision in the next iteration.) The pedagogy-quality items are recorded by the facilitator in a post-class note in `claude-logs/`. --- ## Troubleshooting - **Notebook will not open.** Use the W-A paper fallback handout. The facilitator has copies. The exercise is the same. - **Spreadsheet will not load.** Use the W-B paper fallback packet. The lookup table replaces the formula. - **You missed the lecture portion.** The trimmed primer in `handouts/w05_stablecoins_primer.pdf` covers the same material at study pace. The deck is the visual companion to the primer. - **You disagree with the Tether steelman.** Good. The steelman is designed to be challengeable. The W-B simulation gives you a way to test which side dominates in motion. - **You feel rushed.** The 5-minute buffer is yours. Tell the facilitator. We will use it. --- ## Optional extensions (for advanced students) - **ADV1 (mint and redeem mechanics):** Read the Circle SVB postmortem in detail. What did the redemption queue look like in numbers? - **ADV3 (Tether reserve composition):** Pull the last four Tether quarterly attestations from `https://tether.to/transparency`. How has the T-bill share changed? - **ADV4 (DAI as crypto-collateralized contrast):** Read the MakerDAO RWA pivot story. How is DAI in 2026 different from DAI in 2020? These are not graded. They feed forward into the rest of Module E (DeFi).