A stable coin is any cryptocurrency pegged to a stable asset, such as gold or fiat currencies. In theory, a stablecoin will remain constant in price, as it is a representation of a known amount of an asset.
My question is: Does a stable coin have a set total coin supply? Or does it have to be able to create and destroy based on the demand?
The image in my head goes like this:
A stable coin pegged to a currency started off its business saying it would have a coin supply of $5 billion. Everything works well until one day, the crypto market goes south and everyone rush to buy the stable coin. The coin is unable to sell to everyone because the demand for the coin is too high, so some people are left out.
Please correct me my misconception
A stable coin can still move a little bit when it comes to its price since it will be affected by the demand. but since its pegged to another currency, like the dollar in the case of tether, the variations in the price are going to be a lot lower, the only time when I saw the price of tether being very low was when there were a lot of rumors about that not every single tether is backed by a dollar.My question is: Does a stable coin have a set total coin supply? Or does it have to be able to create and destroy based on the demand?
The image in my head goes like this:
A stable coin pegged to a currency started off its business saying it would have a coin supply of $5 billion. Everything works well until one day, the crypto market goes south and everyone rush to buy the stable coin. The coin is unable to sell to everyone because the demand for the coin is too high, so some people are left out.
Please correct me my misconception