Stablecoins aim to minimize price volatility through algorithmic stabilization mechanisms, but complete elimination of fluctuations is challenging. Algorithmic stablecoins use smart contracts to adjust supply dynamically, responding to market demand. For example, if the price rises above the peg, the algorithm increases token supply to lower it, and vice versa. However, these mechanisms aren't foolproof. Market shocks, low liquidity, or flawed designs can lead to de-pegging, as seen in cases like TerraUSD. Unlike fiat-backed stablecoins, algorithmic ones lack tangible reserves, relying solely on code and market confidence. Extreme volatility or loss of trust can destabilize them. While algorithms can dampen fluctuations, they cannot fully eliminate risks from external economic factors or speculative trading. Thus, while effective in theory, algorithmic stablecoins face practical limitations in achieving perfect price stability.