Tether Holdings, the issuer of the world’s largest stablecoin USDT, has made the strategic decision to forgo plans for launching its own blockchain. This move comes as a result of market saturation and a recognition of the principles of supply and demand, as highlighted by Paolo Ardoino, Tether's chief executive officer, in an interview with Bloomberg news.
There Are Already Well-Established Blockchains
Ardoino emphasized that despite Tether's advanced technological capabilities, the blockchain market is already teeming with various established and effective options. Tether’s USDT, with a market cap of $117 billion, plays a critical role in global crypto trading and remittances.
While Tether possesses ample resources to create its own blockchain, the decision to abstain from doing so aligns with the prevailing dominance of a few major blockchains. Market data shows that the top five chains out of 306 in existence control approximately 86% of the total value of assets locked. ethereum leads the pack with a Total Value Locked (TVL) of $87.7 billion out of the $133.2 billion across all chains.
TRON, another key player, manages $8.1 billion in TVL and supports 49% of USDT’s supply. The success of a blockchain is influenced by factors such as speed, low fees, use cases, and robust security. ethereum's leading position can be attributed to its first-mover advantage, flexibility for smart contract development, and hosting the second-most liquid token, despite higher fees.
The blockchain landscape has evolved into a multichain environment, prompting developers and issuers to diversify their operations across multiple platforms. Tether remains committed to prioritizing security and sustainability for USDT, irrespective of the blockchain it operates on.
Concerns Around Tether Reserves
Despite Tether's significant success, concerns persist in the crypto sphere regarding the quality of assets backing USDT. A recent United Nations report highlighted Tron's popularity among cyber fraud and money laundering activities in Southeast Asia.
Tether has responded to these concerns, emphasizing its collaboration with law enforcement and the traceability of its token. In efforts to enhance awareness and education around digital assets, Tether partnered with Fuze, a digital asset infrastructure provider, earlier this year. Their collaboration aims to address various aspects of education within the digital asset space, including compliance, regulatory framework development, and cross-border payment solutions.
In a bid to expand its utility, Tether introduced a new payment option for the people of the Philippines, allowing them to utilize USDT for their social security system (SSS) contributions. The SSS is a government-run social insurance program that aids employees in both formal and informal sectors.
