What Is the Primary Risk Associated with Algorithmic Stablecoins That Use Mint and Burn?

The primary risk is a "death spiral" or de-pegging event. This occurs when the stablecoin loses its peg, and the mechanism designed to restore it (often involving minting a volatile asset) fails.

The resulting panic selling and mass redemptions can cause a rapid, irreversible collapse of the stablecoin's value. This relies heavily on market confidence.