Fiat-backed stablecoins are only as strong as the quality, custody, and legal structure of their reserves. Two stablecoins can both claim "1:1 backing" yet carry very different risk profiles depending on what backs them and who can access the assets in a stress event.

Key distinctions to evaluate:

Cash & T-bills — highest quality, shortest duration, most liquid (e.g., short-dated US Treasuries).
Commercial paper / repos — higher yield but credit and rollover risk; maturity mismatch can force fire sales.
Bank deposits — exposed to the custodian bank's solvency and uninsured balances above FDIC limits.
Attestations vs. audits — an attestation is a point-in-time snapshot, not a full audit of controls and liabilities.

Reserve Type	Liquidity	Credit Risk	Yield
Cash / T-bills	Very High	Very Low	Low
Commercial paper	Medium	Medium	Medium
Bank deposits	High	Bank-dependent	Low

In 2023, USDC briefly depegged to ~$0.88 when ~$3.3B of its reserves were trapped at Silicon Valley Bank — a reminder that custody concentration is itself a risk factor.