That's the optimistic scenario. The pessimistic is USDC goes down to $0.98 and then people panic and sell and it goes down to $0.97, $0.96, ... Meanwhile Coinbase tries to borrow a whole lot of cash to try to prop up the currency. The amount they have to borrow keeps going up though and at some point they stop being able to cover the promise.

This scenario is not implausible. It literally happens every few years in the modern economy with different assets. Real assets that are backed by real things, not a completely synthetic currency.

The dollar assets backing USDC are the only thing that really secures it. Not "game theory". Sometimes you lose games.