Redemption is the anchor
A fiat-collateralized stablecoin claims that each token is redeemable for one unit of currency. That claim, and not any technical property of the token, is what makes the market price sit near one. The mechanism is arbitrage: if the token trades at 0.98 and can be redeemed for 1.00, buying and redeeming is profitable, and the buying pushes the price back up.
Two conditions have to hold for that to work. Redemption must actually be available, and it must be available to enough participants to matter. Where redemption is limited to large verified counterparties with minimum sizes, the arbitrage still functions but through a narrow channel, which is why a peg can wobble on retail venues while institutional redemption is unaffected.
What reserves and attestations establish
An attestation is a report by an accounting firm that stated balances existed at a stated moment. It is not a full audit: it does not opine on the entity's internal controls, on the entire financial position, or on whether the same assets are encumbered elsewhere. It is a point-in-time confirmation, and the distinction is substantive rather than pedantic.
The composition matters as much as the total. Reserves held in cash and short-dated government bills can be liquidated quickly at predictable prices; reserves in commercial paper, secured loans or other tokens cannot necessarily be. A reserve that fully covers the tokens on paper can still fail to meet a wave of redemptions if converting it takes time, which is the mechanical difference between solvency and liquidity.
Attestation, audit, proof of reservesThree different assurances with three different scopes. An attestation confirms balances at a moment. An audit examines statements and controls over a period. A cryptographic proof of reserves can show on-chain holdings but cannot show off-chain liabilities. None of the three establishes that every token could be redeemed at once.
Where a peg actually slips
Historically the pattern is consistent: a peg deviates when redemption becomes doubted, not when reserves are formally insufficient. News about a banking partner, a pause in redemptions, or a disclosure about reserve composition is enough. The arbitrage that holds the peg is a bet that redemption will work, and when that bet is uncertain the arbitrageurs step back precisely when they are most needed.
Depth is the other variable. Even a fully backed token trades below its peg if a large sell order meets a thin order book, because on-venue price is set by the resting orders rather than by the redemption right. That is a liquidity event, it usually resolves in hours, and it is mechanically different from a reserve problem despite looking identical on a chart.
What this means as an execution question
Treat a stablecoin balance as an obligation of a specific issuer under specific redemption terms, not as cash. The relevant questions are who the issuer is, what the redemption terms are, who is eligible to use them, what the reserves consist of, and what assurance exists over that. All five are published to varying degrees, and all five are more informative than the price chart.
The same reasoning applies to any design claiming a fixed value, including algorithmic constructions that hold a peg through incentives rather than redemption. When the mechanism is arbitrage against a redemption, ask whether redemption works. When it is arbitrage against newly issued tokens, ask what happens when nobody wants those either.