People hold stablecoins so they can use the practical equivalent of a United States dollar "on chain." Ask your local bank to let you deposit your savings accou

People hold stablecoins so they can use the practical equivalent of a United States dollar "on chain." Ask your local bank to let you deposit your savings account into Aave or Yearn and you're going to be shown the door. In order to use the smart contracts on the blockchain you first need to bridge your "real world" funds to the chain by using a service like Coinbase. Coinbase will take your USD and give you Ether or a stablecoin like USDC in exchange. You can use either of those assets on chain in smart contracts. To answer your question as directly as possible, people hold stablecoins because they want to use USD in smart contracts.