from Hacker News

A Visual Explanation of Algorithmic Stablecoins

by is0tope on 2/3/22, 2:10 PM with 6 comments

• by jqpabc123 on 2/3/22, 3:38 PM

  Hocus pocus, smoke and mirrors, yadda yadda.

  Bottom Line: In most cases, there is no meaningful independent auditing or regulation of any kind.

  With few exceptions, no one gets to look behind the curtain and see what is *really* going on. All the details and techno-magic explanations are basically irrelevant because you're still totally at the mercy and whim of the exchanges and those running the "stable coin" to follow them.

  In the exception cases, it's pretty much just another bank account with all the same operating rules and procedures but without FDIC insurance and watch out for those transaction and withdrawal fees.

• by kwertyoowiyop on 2/3/22, 2:22 PM

  > In a full-reserve bank, each liability is matched 1:1 with assets in reserve. If someone with a digital dollar asks for the cash back, the holder is given the physical dollar and the corresponding digital liability is destroyed. This is how Tether, USDC, and every other fiat-backed stablecoin works.

  Tether is fully backed with physical dollars?