This lesson covers stablecoins: crypto tokens designed to hold a steady value, almost always one dollar, and the reason they matter far more than their boring name suggests. Stablecoins are the settlement rail of crypto trading. Most trades are priced and settled in a stablecoin rather than in bank dollars, so the question of whether a stablecoin can actually hold its peg is not a curiosity but a systemic risk. We cover the three ways a peg is backed, work through the arbitrage that normally keeps a peg in place, and use the UST/Luna collapse as the cautionary tale of what happens when the backing is an illusion.
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