Two thought experiments to evaluate automated stablecoins
Here's a different thought experiment.A sponsor organization maintains a stable coin pegged 1:1 to the US dollar. The token is bought and sold on the open market to keep the peg.Because it works so well, demand for the stable coin rises for years on end, resulting in the issuance of trillions of dollars worth of stable coin. Eventually the stable coin market cap hits 50% of all US dollars in existence. Numerous audits prove that the dollars are indeed responsibly held by the sponsor.Now, what specifically are the assets being held by the sponsor?This might seem like a trick question, but it's not. In what form would a stable coin of that magnitude keep its assets to ensure sufficient liquidity that the peg is never broken and can't be attacked successfully?