Quote from: Abiky on April 09, 2024, 03:57:45 PM

Quote from: jrrsparkles on April 01, 2024, 04:44:07 PM

The definition of stablecoin is, that USD or any other fiat backs it.

This is free market, everyone can launch their own project whether it'd value depends on its demand and supply or like USDT, its value is pegged to USD but we never know the creator actually has reserves for the printed tokens or if they just do it out of thin air that's why it's not suitable for holding and people mainly uses it for trading.

The real problem are algorithmic stablecoins. They're not backed by anything. You can lose it all in an instant if they fail to hold the peg against the USD. This is what happened with Terra/LUNA's UST stablecoin.

USD-backed stablecoins are a much safer bet. But there's also the risk of losing it all if the stablecoin issuer fails to match the supply with its USD reserves. USDT is one of those stablecoins with a shady history. Who says it won't lose its peg in the future? For what I know, nothing lasts forever. I'd suggest you diversify your investment to minimize risks as much as possible. You'll thank me later. Cheesy

Absolutely, any stable coin that is centralized can lost its value at any time and I only knew one stable coin which is DAI backed by smart contracts of ethereum but as we know people prefer the tokens with liquidity so they just go with USDT even if there is risk of losing their money.