5. Stablecoin Risks:

Risks are decreasing. The main risks may come from regulatory changes or compliance issues of the issuers, but the overall trend is moving towards greater stability.

Early algorithmic stablecoins (e.g., USDT) collapsed due to mechanism issues, but most stablecoins today are backed by fiat currencies or highly liquid assets, making them more secure.

Initially, there were various types of stablecoins, including algorithmic stablecoins that were essentially aircoins, which triggered specific algorithmic mechanisms when their prices fell; there were also stablecoins pegged to assets like Bitcoin, but these were not true stablecoins because Bitcoin's liquidity is highly volatile and prone to triggering a downward spiral.

Such cases are gradually decreasing as regulations now require stablecoins to adopt a 1:1 fiat custody mechanism. For example, USDT's bank custody has long been opaque, but issuer risks will become more controllable in the future.

Other risks include institutional bankruptcy, restructuring, or operators absconding, but these are unrelated to the core mechanism of stablecoins.

Governments are strengthening control through licensing regulations, such as accessing KYC data, transaction records, and annual audits.

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