Key insights:
- Tether, the issuer of USDT, chose not to launch its blockchain due to market saturation concerns.
- USDT has expanded to Aptos, a blockchain known for speed and low transaction costs.
- Tether partnered with UAE firms to introduce a fully backed dirham stablecoin.
Tether Holdings, the stablecoin issuer, USDT, has decided against launching its blockchain. The company pioneered the stablecoin market in 2014. It determined that the current blockchain landscape is too saturated and that introducing another distributed ledger would not be a strategically beneficial move.
Tether’s CEO Explains Decision Amid Market Saturation
In an interview with Bloomberg News, Paolo Ardoino, CEO of Tether, shared the reasoning behind the company’s decision. He noted that blockchains are becoming increasingly commoditized, with numerous players offering similar functionalities to the public.
Ardoino explained that while Tether has solid technological capabilities, entering a market filled with well-established blockchains would not necessarily be advantageous. Rather than launching its blockchain, Ardoino emphasized that Tether focuses on maintaining the security and sustainability of USDT transactions.
Tether currently operates across several existing blockchain networks, which the company considers sufficient for its needs. Ardoino also expressed confidence in the availability of robust blockchain options, stating that introducing another one might not align with the firm’s strategic goals.
Stablecoin Market Origins and Tether’s Agnostic Approach
Tether was one of the first movers in the stablecoin space, launching USDT in 2014. Since then, it has grown to dominate the market with a supply of over $80 billion in circulation. Ardoino reiterated Tether’s core objective: providing a reliable, stable digital currency effectively backed by traditional fiat assets.
He described Tether’s product as having a solid market fit and noted that the company’s focus remains on ensuring the stability and security of its stablecoin. Tether’s approach to blockchain technology is “agnostic,” meaning it does not favor one blockchain over another.
Instead, it uses blockchains as transport layers to facilitate the movement of its stablecoin. The company remains satisfied with this model, which allows for flexibility in interacting with various networks, provided they meet the company’s standards for security and efficiency.
Tether Expands Aptos Blockchain
Despite its decision not to launch its blockchain, Tether continues to expand its reach by integrating USDT into new blockchain platforms. On August 19, 2024, the company launched USDT on the Aptos blockchain, a network mostly known for its speed and scalability.
Aptos, which has seen rapid growth, processed 157 million transactions in a single day in May 2024, underscoring its potential to support high transaction volumes.
By leveraging Aptos, Tether aims to reduce transaction costs for USDT users, offering gas fees that are a fraction of a penny. This integration aligns with Tether’s strategy of improving global accessibility to digital currencies and enhancing the efficiency of transactions on existing blockchains.
Partnership to Launch Dirham-Backed Stablecoin
In another strategic move, Tether announced a partnership with the United Arab Emirates’ Phoenix Group and Green Acorn Investments to launch a dirham-backed stablecoin. The new stablecoin, fully backed by UAE-based reserves, is designed to digitally represent the AED currency.
The collaboration reflects Tether’s ongoing efforts to expand its stablecoin offerings into new markets while maintaining its commitment to transparency and security. The dirham-backed stablecoin is intended to offer users in the UAE a cost-effective way to benefit from digital currency while ensuring the asset remains fully backed by liquid reserves.
Tether views this expansion as an opportunity to enhance financial accessibility in the UAE market, leveraging its expertise in stablecoin issuance to meet the growing demand for digital assets linked to local currencies.