@profoundlynerdy My understanding is that it's a classic arbitrage mechanism. They state that Tethers are redeemable at 1USD per, so anyone selling for less than that is giving away free money, so in any vaguely-efficient market that discrepancy goes away. Anyone selling for more than 1USD per is asking people to give away money and in theory should get no buyers. The whole system operates on the same mechanism as "fiat" currencies, in that its power comes entirely from people believing in it, if enough people concluded that Tether's value was not 1USD then the price would tank in a classic "bank run" style situation. Tether could intervene by using reserves to buy tokens that would prop up the price, but that would then also deplete the reserves and thus make the 1USD backing seem even less plausible.

tl;dr arbitrage and majority consensus, just like a classic fiat currency.