It relies on people to keep buying the second coin (Luna) in order that its price is supported to a level that the peg mechanics work. But there's no fundamental value anywhere in the system, you can't pay your taxes with this, it's not backed up by a government with a monopoly on violence nor by a large economy of productive output. So the "trust us, it's valuable" part (which ends up being the only part that matters) doesn't work.