While stablecoins claim to be backed by US Dollars,

Some stablecoins hold dollars as a reserve.

For example. HBD does not claim to be backed by US Dollars. HBD is backed by HIVE. The conversion program will convert HBD into a dollar worth of HIVE based on the HIVE price reported by the witnesses.

This formula is problematic as it amplifies the instability of HIVE. Notably, power users convert their HBD into HIVE when the price of HIVE is low. So, when there is a drop in the price of HIVE, the power users convert their HBD into HIVE and dump the newly minted HIVE onto a week market.

The HBD derivative has the second bad effect of pegging the future of HIVE to the USD. Which might prove detrimental in the long haul.

!BEER