Traded under the ticker USDT, Tether has become the primary source for trading into and out of exchanges / wallets. Tether was launched in 2014, and has since become the unquestionably leading stablecoin since 2017. Tether currently has a market cap more than $19 billion higher than its closest stablecoin competitor (USD Coin – USDC), and maintains a significantly higher daily volume.
Tether – $70 billion daily volume
USD Coin – $4 billion daily volume
What Is Tether Used For?
The Tether stablecoin has two primary value attributes:
1. The coin is created to maintain its value of 1.0000 USD as it is pegged to the US Dollar. The stablecoin maintains a consistent value, and with little to no volatility, it can be used as a stable staking opportunity with a predictable annual return. This also allows Tether to generate high interest rates through lending protocols which adds another dimension to its usability.
2. Tether is used to transfer funds into or out of an exchange, and is the necessary storage currency to use when wanting to keep your crypto on the sidelines waiting for a quick investment opportunity. Therefore, instead of sluggishly moving funds from a bank account through to an exchange and waiting for approval, confirmation etc., keeping the funds on an exchange as a non-volatile cryptocurrency is a huge benefit to the investment process.
Token Issuance
Token Issuance is a very crucial part of any stablecoin. This is because they MUST maintain a consistent value to their pegged asset, and in order to do so, a balanced token supply and stored backing of the tied asset must always be equal.
Tether USDT tokens are issued when a verified user requests a specific amount. In order to validate this, Tether must maintain its reserves and back each USDT token for $1.00 US dollar. This also works in reverse, as Tether must be able to burn a request of 20,000 USDT tokens in exchange for $20,000 US dollars at any given moment. If not, Tether’s purpose and credibility is diminished and it becomes an untrustworthy medium of exchange.
The Tether Reserve Controversy
Despite claims that Tether USDT was backed 1-to-1 with the US dollar, a representative of Tether Limited went on to state that only 74% of the USDT tokens were backed by the US dollar.
In 2021, it was revealed that Tether ONLY backed an astounding 2.9% of their USDT tokens with the US dollar. The full backing is substantiated by corporate bonds, secured loans, liquid assets, and commercial paper. While this (depending on your opinion) may be a positive or at least somewhat reassuring to know, Tether places no legal guarantee that a single USDT token will be exchangeable for $1.00 USD.
Sketchy History
Tether has also been associated with the following:
Tether withheld reserve information for approximately 4-5 years, where it finally began filtering in-depth details and publishing them quietly during 2019. However, by 2022 Tether has become almost fully transparent, and shares most of its reserve and allocation details publicly with real-time updates.
Tether bailed out associate ‘Bitfinex’ when $850 million in funds went missing, which resulted in Tether Limited LTD. paying an $18+ million fine.
During 2021 & 2022, Tether’s price depegged several times, dropping as low as $0.95 on May 12th.
Tether’s Strong Points
The no.1 stablecoin prides itself with several standout attributes:
Efficiency.
Tether is the leading stablecoin for availability & liquidity across all platforms. Tether is accessible on most crypto exchanges and is supported by Bitcoin, Ethereum, TRON, EOS, Algorand, BTC Cash, and Solana, amongst other leading cryptocurrencies.
Transferring between fiat currencies is simple & seamless. Tether accommodates Euros, Dollars, Pesos, Pounds, Yuan, Gold, and more.
Low fees.
Tether holds a partnership with the city of Lugano, Switzerland. Tether and its blockchain are used actively throughout the city for taxation, business, and investing purposes.
Behind The Scenes
Tether is actually owned by iFinex, which is a Hong Kong based corporation owned by Phil Potter, Jan Ludovicus van der Velde, and Giancarlo Devasini. They also own the exchange Bitfinex.
