Now that may turn out in the future to be revealed to be a sham, and the market will lose faith. But right now USDT only has market value because some segment of people believe in the promises made by the Tether Corporation. If I fork the chain, and I'm running a clone of USDT, and the Tether Corp says "there are no promises behind that token", then very clearly forked-USDT will be worth zero.
The only reason stablecoins work is because they have a mechanism where you can quickly 1. mint a new coin and sell it for slightly more than $1 for it 2. buy a coin for less than $1 and redeem it for $1 in value
Though this may happen in reality because of bridges (centralized/decentralized + permission/less): one asset is locked in a smart contract (or many smart contracts) on one chain, then minted in equivalent amounts on another, people will trade as if holds the equivalent value modulo liquidity for the bridged asset (as long as the locking/minting assumptions with the bridges hold true).
EDIT: I just realized the last letter in your examples are “A” and “B” to signify two versions of the same thing. My eyes aren’t what they used to be!
This is an interesting problem because it shows a fundamental flaw in blockchains. They only have authority over themselves. No wonder cryptocurrencies and their advocates are so self centered. Because nothing that exists outside their chain (even other cryptocurrencies) is graspable!
It's not trustless because the trust (in the algorithm) is still there, the difference is that they minimized the need for trust to the absolute minimum. It's no longer about how much you trust but about what you trust.
USDT claim (“Every Tether token is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”).”) [1]
TrueUSD claim ("We work with independent third-party financial institutions to provide cash management for the underlying reserves backing TUSD tokens so that each TUSD token is backed by an equivalent amount of dollar deposits, cash equivalents, short-term government treasuries, or liquid investments. To achieve this, a portion of the dollar deposits backing TUSD are held in one or more depository accounts at our Banking Partners whose deposits may not be insured by the Federal Deposit Insurance Corporation (“FDIC”). [2]
Frax claim ("FRAX stablecoins can be minted by placing the appropriate amount of its constituent parts into the system. At genesis, FRAX is 100% collateralized, meaning that minting FRAX only requires placing collateral into the minting contract. During the fractional phase, minting FRAX requires placing the appropriate ratio of collateral and burning the ratio of Frax Shares (FXS). While the protocol is designed to accept any type of cryptocurrency as collateral, this implementation of the Frax Protocol will mainly accept on-chain stablecoins as collateral to smoothen out volatility in the collateral so that FRAX can transition to more algorithmic ratios smoothly. As the velocity of the system increases, it becomes easier and safer to include volatile cryptocurrency such as ETH and wrapped BTC into future pools with governance. ")[3]