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My point is that if there has to be a dollar in reserve to have a dollar of stablecoin, then that dollar in reserve isn’t doing anything productive, so the stablecoin has to work twice as hard - to make up for the dollar’s “lost” productivity, and to make it worthwhile, the productivity of the stablecoin too.
Otherwise you just have a bunch of dollars sitting in a vault doing nothing, while the stablecoin floats around the world doing whatever it is that Stablecoins do.The dollars don't literally sit in a vault doing nothing, anymore than dollars you put in a checking account sit in the bank vault doing nothing. The simplest version of this was that the stablecoin issuer collects (for example) a billion dollars and issues a billion stablecoins, and then takes that billion dollars and invests it. Say, T-bills. Then they sit back and collect $40 million a year for doing basically nothing, since the stablecoins don't yield any interest - users of the stablecoin are willing to forego that in exchange for the service of having something that's more useful for payments than physical dollars would be.
Or one new model is they deposit the money with a big regulated financial institution like BlackRock (who go out an invest in T-bills or whatever) rather than investing it themselves. I know I already linked to an article by Matt Levine, but he writes about crypto a lot in a very accessible way:
https://archive.ph/RipQc#selection-1555.0-1567.163
