Comment by jqpabc123
4 months ago
the algorithmic ones are not fully backed by reserves.
And you just know that the "collaterized" ones are? In most cases, their books aren't open. And they wouldn't lie about this would they?
In some strange way, the crypto brain has been programmed to ignore the obvious with a hand wave and just accept all the chicanery that is crypto.
I gave you Liquity as an example. They don't have "books", it's a smart contract which takes ETH as a collateral and lets ppl to borrow LUSD against it.
Maker initially worked same way, but eventually they started accepting off-chain collateral.