[bko]

The incentives are such that if you can figure it out you can basically create money out of nothing. So there will always be people that are looking for it to succeed. It's alchemy. It all breaks down if the floater goes to zero or a price such that you can't mint enough to stabilize the coin. And on a long enough time span this is bound to happen.

The stable coin can never go above its target value, but it can go below. So you're essentially holding value and then getting wiped out every N years or so. So it's doomed to fail

[josefrichter]

It’s a fascinating intellectual exercise. I think at this point nobody really knows whether or not it can work.

[bko]

I ask two questions to see if passes the smell test:

1. Does this work if the floater is worth 0?

2. Is there some kind of natural cap? In other words, can I print an infinite amount of dollars?

None of the implementations works without some value being attributable to the floating token(s). Similarly, I never hear of any natural caps. For instance, you can create a stable coin with a market cap of $100 and just mint N tokens of the floater for M where M*N = 100. But why can't you mint more and sell at a slightly lower price? Is there some natural limit? If so, can't the price of the floater go down to such a level to not be able to support the market cap?