You could maybe make a stable coin work by having a progressive claw back tax on it for anyone but the bank.

I.e. after 1h the tax is 10% and down to 0 coins left.

Then there is a limit on how much outstanding coins (debt) there can be.

I've always been curious about this, if you have a stable coin that's in the billions like some are, can't they just put the fiat into a bank account and live on the interest rate?

You can, now that most (all?) interest rates are significantly above zero again.

This would have been significantly harder e.g. in the Eurozone before 2020.

Yes. For example-

The Wall Street Journal "Cantor Fitzgerald helps manage $39 billion Treasury portfolio that makes up lion’s share of stablecoin’s reserves"

https://archive.md/HL307 (https://www.wsj.com/articles/wall-street-firm-oversees-billi...)

(I am NOT endorsing that company, Tether / Bitfinex, or suggesting that anybody invests in it in any way. Just agreeing that if you have a lot of money, then you might profit from it)

a $1B high-yield (3.5%) savings account yields $35,000,000. Sounds like plenty to operate what is essentially a shell company plus app for managing monopoly money :)

How much yield (return) do you need? In 2018 interest rates were still very low. Now treasuries yield much more. Of course that fluctuates, but still.

What does the cost structure look like? It's not the tokens, is it the KYC?

I don't understand how this could be true: can't you just charge fees for the things which require your effort? Tether, for example, charges 0.1% for every withdrawal.

Yes you can.

But smaller the profit, smaller the motivation to do it.

Bigger the profit higher the amount of other companies.

Too high of fees and people won't do it. And than upkeep costs also money.

Now you have inflation build in.

This has very little to do with stable :)