What Is the Difference between a Collateralized Death Spiral and an Algorithmic One?

A collateralized death spiral is less common and occurs if the collateral's value drops so rapidly that liquidation cannot keep up, leaving the stablecoin under-collateralized. An algorithmic death spiral is a design flaw where the mechanism intended to stabilize the coin (usually involving a volatile governance token) fails catastrophically, leading to an irreversible collapse of both the stablecoin and its backing token.