Bitfinex's initial need for them is simple: they have a very, very lucrative business, which is allowing speculative demand and supply to meet and charging fat

Bitfinex's initial need for them is simple: they have a very, very lucrative business, which is allowing speculative demand and supply to meet and charging fat fees for matching them. This business requires speculators to be able to move money in and have the expectation of getting money out. Bitfinex could not credibly provide that after they lost the ability to clear USD-denominated wires when Wells Fargo cut them off (technically, declined to be an intermediary bank for their Taiwanese banks' wires) for AML/KYC compliance issues. So they took what was then a fun little crypto side project and got people to believe it was the next best thing to a fiat onramp. This, somewhat incredibly, worked. Then the rest of the crypto economy glommed onto the fact that this is really useful for them, because tether was much more AML/KYC friendly (in the sense that you could use it when your name was Ima Moneylaunderer) than USD-denominated rails typically are, and it fulfilled a liquidity-preserving function similar to casino chips. The cryptocurrency community produces essentially no value via sale of services outside of the community, so the balance of payments always has to satisfy "We can only pay out as much hard currency as people have deposited." Prices only keep going up to the extent that folks don't try to withdraw the money. Tether encourages people to realize gains but keep their gains on the table. (The community thinks that the main use case is facilitating inter-exchange liquidity/arbitrage but given sufficiently well-capitalized arbitragers tether provides no benefit over "We are capable of keeping a ledger of our activities in a database of our choice.") Those are the main reasons why. I strongly suspect that the community, once it realized that Tether was imperiled, brought several "competing" stablecoins to market because they both a) realized the systemic utility of stablecoins and b) were attempting to avoid the entire ecosystem vanishing in a nuclear fireball as tether unwound. Who knows, maybe they'll succeed.