Stablecoins are doomed to fail

The author, Preston Byrne, argues that crypto-collateralized stablecoins are doomed to fail, calling them perpetual motion machines of modern finance. He says the MakerDAO Dai system is essentially an overcollateralized derivative contract that only works if Ether's price keeps rising, since a severe Ether drop would wipe out the collateral and the stablecoin's value. He gives an example in which a user posting $150 of Ether collateral to obtain $100 of Dai could lose the full $150 in such an event. He also cites earlier failures, including the Bitshares BitUSD peg, which fell apart about 100 hours after its 2014 launch, and the Basecoin scheme from October 2017.