How does FDUSD work?

Could you please explain to me how FDUSD works? I'm quite fascinated by the concept of stablecoins and their potential in the crypto market. Could you elaborate on its underlying mechanisms, including how it maintains its pegged value? Also, I'm curious about the role of collateral in FDUSD's operation and how it affects the stability of the coin. Additionally, could you discuss any potential risks or challenges associated with using FDUSD? I'm keen to understand its intricacies and how it fits into the broader cryptocurrency ecosystem.