Failure follows directly from where trust lives
Once you see that each stablecoin design places trust in a different place, custodial honesty, on-chain collateral math, or market confidence in an incentive loop, it becomes clear why each one fails in a distinct way rather than all converging on the same failure story. Fiat-collateralized stablecoins fail through problems with the custodian: insolvency (the reserves turn out not to be there, or not to be liquid enough to meet redemptions), fraud (the custodian misrepresents what it holds), or loss of banking access (regulatory or operational events cut off the custodian's ability to move dollars, freezing redemptions even if the reserves technically exist). None of these failure modes involve the blockchain or the smart contract at all, they happen entirely in the off-chain world the token is supposed to represent.
Crypto-collateralized stablecoins fail through the mechanics of their on-chain safety system breaking down under stress: a collateral price crash that happens faster or deeper than liquidations can process, leaving positions genuinely underwater and the system holding uncollateralized debt, or an oracle failure (inaccurate, delayed, or manipulated price data) that causes the protocol to misjudge collateral values and either liquidate positions that were actually fine or fail to liquidate positions that were actually unsafe. These failures are technical and mechanical, rooted in the gap between how fast markets can move and how fast the safety system can react.