How Does a Lack of Transparency in Collateral Audits Contribute to De-Peg Risk?

For centralized stablecoins, users must trust the issuer's claim that sufficient collateral is held. If audits are not regular, public, or comprehensive, users may doubt the claim.

This lack of transparency can trigger a crisis of confidence, leading to mass redemptions and a de-peg if the collateral is, in fact, insufficient.