Tether mints the tokens upon deposit of fiat on Bitfinex exchange OR when the Tether peg increases above $1 too far. Users are incentivized to do this as well (

Tether mints the tokens upon deposit of fiat on Bitfinex exchange OR when the Tether peg increases above $1 too far. Users are incentivized to do this as well (deposit dollars onto bitfinex, get new tether for that 1:1, sell new tethers above the peg on the open market, pushing the peg down) Circle/Coinbase use the exact same mechanism. These kinds of stablecoins are destroyed only upon explicit redemption. Not when sold to someone else on the open market. It’s not that different from a brokerage account’s deposits. People don’t actually withdraw that much because they don’t need that much cash. They keep their cash in those ecosystems waiting for other trading opportunities and add more from other sources into the exchange. I know it’s absurd to assume tether functions as described, 99% of the time for 99% of the value. But the market is showing the same thing with stablecoins that are better governed. For the decentralized/permissionless/uncensorable minded people, The best bet is for other kinds of stablecoins to grow faster