Very true, that case parallels non-crypto assets like index funds. You own the upside and downside of the collateral, and you are also exposed to some risk that the company managing the funds does something extremely stupid and/or malicious.
I said above:
> we are left arguing that the risk of collapse is negligible, or arguing that there is some other benefit of owning the stablecoin to compensate for the additional risk of owning stablecoins instead of owning the collateral
In the case of an index fund, the typical purchaser is motivated by both a belief that the risk is negligible based on the reputation and track record of the fund manager, plus the "other benefit" of the convenience of investing in a single mutual fund rather than trying to purchase the same basket of stocks at small scale.
I agree that an automated stablecoin might offer sufficient convenience to be attractive to some investors, provided they consider the risk of collapse to be negligible.
I said above:
> we are left arguing that the risk of collapse is negligible, or arguing that there is some other benefit of owning the stablecoin to compensate for the additional risk of owning stablecoins instead of owning the collateral
In the case of an index fund, the typical purchaser is motivated by both a belief that the risk is negligible based on the reputation and track record of the fund manager, plus the "other benefit" of the convenience of investing in a single mutual fund rather than trying to purchase the same basket of stocks at small scale.
I agree that an automated stablecoin might offer sufficient convenience to be attractive to some investors, provided they consider the risk of collapse to be negligible.