HACKER Q&A
📣 linsomniac

Why do USD coins depeg, when $US exists?


With all the news about USD tether coins losing their peg, it makes a fella wonder how you implement a US$ tracking coin without there being US$ behind them. I'm assuming that if there are US$ behind them, that it wouldn't be possible for the price to be anything other than 1US$. And if there aren't US$ behind them, how could you EVER expect them to stay pegged.

  👤 codefreeordie Accepted Answer ✓
The short version is that you have identified why the coins keep failing.

None of the coins are directly backed by US$. Some are backed by an organizing who promises to exchange them 1:1 for US$ on demand -- but the coins are only backed by the sponsor's ability and willingness to do so.

Others, like Terra, are not backed by US$ even indirectly and ... well...