so lemme get this straight. They make a "stablecoin" pegged 1:1 USD:token. Then they "raise" money, or sell it and use those funds to "back it". They make money from all investment income from that like tether investing in commercial paper in china and stuff. adds up quickly when you have billions outstanding.
but in this case instead of USD they bought BTC, but still pegged 1:1 USD:token. right ?
but this makes no logical sense at all.
Here is a deeper dive.
Say one wants to buy Tether.
Tether issues their token based on conversion of fiat/papergold/crypto/etc.... $100k in gold give $100k in Tether....Tether mints $100k out of thin air....
What happens when the value of the converted asset loses value, does Tether make the party that converted their assets to Tether cover the difference? I doubt it... Therefore Tether's reserves are currently only backed by ~5% actual USD deposits, the other 95% is other slightly volatile asset classes.