The difference between Tether and DollarCoin is that you can (if nobody is lying) exchange a tether for a USD. If each USD that bought a tether was burned as in DollarCoin, then it wouldn't have that property. You're not supposed to "burn any money" when you mint tether, you're supposed to put aside $1 that can be exchanged for that tether at a later date. I think what you're missing is that backed stablecoins don't involve burning any money at all, so whether or not that'd be a good idea is irrelevant.
Tether itself is shady and I have my doubts about them, but the concept is simple.
You mint some coins and sell them for $1 each.
Then watch the exchanges and any time the price is above $1 you mint some coins and sell them. Any time the price is below $1 you buy some coins and burn them. Doing this and only this you should always have more dollars in hand than the amount of coins in circulation.
If I want to pay Bob $100, I will buy 100 coins, never mind whether they currently cost $0.998 or $1.002 each on my particular exchange.
So the issuer needs to constantly mint or burn tokens to match the market demand in such a way that it stays as close to $1 as possible.[1]
>For someone to sell something someone else needs to buy the same thing.
That someone is not some rando person, that someone is marketmaker whose business is in filling out the orderbook.
[1] https://www.coingecko.com/en/coins/tether – see the chart for market cap, since the tokens costs $1 it is almost the same as the chart of total number of tokens over time
I don’t think there’s any serious risk of the price getting stuck above $1, because there’s no reason for anyone to buy at that price. Unless it de-pegs completely and becomes a totally speculative asset and everyone just ignores the offer to buy them for $1 I guess?
Considering that no serious and credible audit has ever before verified the backing of USDT, I think we all can agree it is a Ponzi scheme, through and through.
