Why would anyone hold stablecoins instead of the currency they're linked to, kept under a mattress? Is it a death wish sort of thing?
A big reason for stablecoins to exist is that they help avoid the need for numerous conversions between dollars and tokens. Instead, those transactions become token-for-token, which involves lower transaction fees. It also keeps the transactions entirely within blockchain systems for easier coding, and (somewhat) more predictable outcomes.
I say "predictable" but of course the risk of disaster, especially for Tether, seems high to me.
This week there was a pretty good opinion piece in The Economist about the FTX debacle being a bright spot for "decentralized exchanges". In those entities, transactions are by necessity token-for-token. In the more normal exchanges, like Finance, most traded volume is also removed from notional dollars, being found instead as futures contracts.
I'm not actually much a believer in the value of cryptocurrencies, but if I am wrong and there is value in cryptocurrencies then there is also value in well-collateralized stablecoins.