The price of crypto coins (bitcoin, etc) is quite volatile. Stablecoins allow you to price products and services without caring about volatility of the currency.
If a stablecoin looks like a dollar, it should be regulated like a dollar, not crypto. Paypal continues to avoid being regulated as a bank; unsophisticated consumers don't need to take on more risk for Paypal and Paxos' benefit.
but you're right it's mostly a solution in search of a problem, you're losing the 'make distrubuted untrusted sources trustable with lots of math/polution' property that crypto claims to solve and with a classic bank with lots of extra math/polution when a strong system of money transfers for USD already exists with a fraction of the computational/polution cost.