[baobabKoodaa]

If you have a backed stablecoin (as opposed to algorithmic stablecoin) that is pegged to the USD without any funny business, then the price of that coin can always be restored to $1. No matter how badly people "lose faith" in the coin.

[vincnetas]

"... without continuous funding "

[baobabKoodaa]

Sounds like you are confusing an algorithmic stablecoin with a fully backed stablecoin. If I am mistaken and you have an actual argument behind that smirk, then please go ahead and present your argument.

[BbzzbB]

GP's last paragraph seems to imply to me too that trust is all that keeps the pegs. I think the billions of dollars in arbitrage opportunity is a bit more powerful than trust as we've seen a few days ago when USDT lost its peg, but what do I know

Trust keeps bank runs away, arbitrage keeps the peg tight (feeding into said trust).

[TomSwirly]

As long as you're willing to expend unlimited amounts of money doing so. But no one is.

[baobabKoodaa]

False. What you're describing applies to algorithmic stablecoin, but it doesn't apply to a backed stablecoin. If I sell 1000 units of BAOBABUSD to people for $1 each, and then they all panic and sell, I can buy all 1000 units of the stablecoin by using the $1000 I already have in the bank. Please explain why you feel that this maneuver requires unlimited amounts of money?