You can't make something from nothing. Alogrithmic stablecoins are just the financial equivalent of honey pots. If you can knock them off their peg you can win big and this has happened many times. Perpetual motion doesn't exist and neither do stable long-term fractionally reserved algorithmic stablecoins.
This is true of all pegs - even in classical finance. This is literally how George Soros made all his money. [1]
MIM and UST are two fractionally reserved algorithmics that got knocked off their pegs yesterday. And this isn't even the first time for UST, I'm led to believe they required a capital infusion of a few hundred million greenbacks to maintain the peg a while ago.
> They let you trustlessly borrow USD ...
Not USD, no. A stablecoin with an opaque backing.
> ... top up your collateral and whatever else you would do with a loan but with no middlemen.
Of course there are middlemen, it's the validators or miners and contract authors and liquidity providers. There's a ton of middle men.