How they keep the peg
Fiat backed stablecoins hold cash and short term government bonds and let approved partners redeem tokens for dollars. Crypto backed ones like DAI lock up more crypto than the coins they issue. Algorithmic designs that relied on incentives alone, such as TerraUSD, have failed.
Risks
A stablecoin is only as good as its reserves and its issuer. Coins can lose their peg during panics, issuers can freeze addresses, and regulators in the EU and US now require licensing and full reserves.