Interesting take, thanks for that. I honestly hadn't thought about the virtual central bank angle.

Do you think there is a significant separation or difference between algorithmic stable coins and ones like Tether? I saw their CEO making the finance television rounds after the Luna/Terra disaster saying that their stablecoin is different and is fully backed by dollar assets. I don't believe their CEO, just off the fact that I can't verify anything he is saying. I think he did state that it was backed by commercial paper but they recently changed their treasury into mostly US treasuries.

I currently don't use Tether, if I do trade then I stick to one of the exchanges on lightning where they as of yet don't use stabelcoins, it's all btc margin. Although, I do see why a lot of people use it like you said and for other reasons. Self-custody seems like a solution, but the only self-custody solution for Tether that isn't a different blockchain seems to be the Liquid network, unless I am unaware of any others.