Reflexer is collateralized by ETH which is traded 65% of the time against USDT which is backed by chewing gum and hope. This USDT trading determines the price of ETH which in turn determines the collateralization rate of RAI.

What kind of logical fallacy are you trying to make here? If someone sets up an exchange for bananas/pokemon cards and it ends up grossing a majority of the global banana trading volume, that doesn't mean the price of bananas is suddenly backed by pokemon cards.

Furthermore, the mechanism through which Reflexer maintains the stablecoin's price is independent from the collateral asset. It works just as well whether the collateral asset is traded against USDT or fiat.

The stability of U.S. dollars without the hassle of opening a bank account. Which, generously, means faster transaction times; realistically, skipping AML.

Given Tether doesn't actually hold much cash, it's more akin to a money market fund that pays no interest.

The mechanism through which that stability is achieved is often 1:1 redeemability for another stable asset through a central portal, but that's orthogonal to the concept of a stablecoin itself.

I didn't feel the need to expound on this as I specified "algorithmic stablecoin" in my comment and provided a link to the project's homepage which features a short FAQ entry answering that very question:

> RAI is actually one of the first stablecoins. What most people call "stablecoins" are actually pegged coins. Pegged coins are oscillating around a specific value (usually pegged to fiat coins such as USD, EUR etc). RAI, on the other hand, is not pegged to anything. The system behind RAI only cares about the market price getting as close as possible to the redemption price.

Unless you mean "understand how the price behaves", in which case RAI is pretty simple too.