But it has nothing on the established fiat currencies, where a >10% change in a year is (rightly) considered a major event

Consider USD/EUR. In 2015 it was 0.9, and currently it's 0.89. It's peak and low was 0.96 and 0.8. That a 10% bandwidth around a stable average.

Over the past year the DAI token on Ethereum has tracked the US dollar better than that, without requiring anyone to hold collateral off-chain.

https://coinmarketcap.com/currencies/multi-collateral-dai/

Pegging your currency to another currency and claiming it's more stable is cheating and doesn't really solve the problem.

Like the US can stop PayPal from providing financial services, they can too stop banks from storing USD collateral to such parties.

Also I don't agree with your "tracked better than that" claim: DAI/USD has a 15% drop and increase in a few months, about the same as USD/EUR in 5 years.

DAI is not backed by Usd collateral, the collateral is a basket of other crypto currencies.