After reading all your replies, I still don't gain much understanding on how a stable coin functions. I'll lay out what I know below.

#1. A "stable" coin pegs its value to either a fiat currency, or precious metal like gold.
So that means it's price is not affected (or at least not affected much) by the market's demand?

#2. From my initial understanding + the replies so far: A stable coin can create and destroy based on the demand.

So, with those two assumption in mind...

When the demand is high:
A stable coin buys fiat currency/metals to hold. By doing so, it will have more value than before. With the increase in value, it can creates more coins, up to a point where each coin will have the same value as the fiat/metal it is pegged to.

Did I get it wrong?


Another thing I noticed from the replies is that some are sceptical of a coin whose value doesn't change. "How will you profit from it?"
From my understanding so far, people will use a stable coin to "store their investment's worth" when the market is not going the way they want it.