Main navigation

Millions of USDT to Be Swapped On-chain, Here's Potential Impact

Mon, 06/12/2023 - 14:45
article image
Godfrey Benjamin
Tether, issuer of USDT stablecoin, set to conduct major on-chain swap
Millions of USDT to Be Swapped On-chain, Here's Potential Impact
Cover image via

Disclaimer: The opinions expressed by our writers are their own and do not represent the views of U.Today. The financial and market information provided on U.Today is intended for informational purposes only. U.Today is not liable for any financial losses incurred while trading cryptocurrencies. Conduct your own research by contacting financial experts before making any investment decisions. We believe that all content is accurate as of the date of publication, but certain offers mentioned may no longer be available.

Read U.TODAY on
Google News

Tether Holdings, the blockchain start-up behind the issuance of the USDT stablecoin, has announced its plans to conduct a major chain swap for the token. Per the announcement, a total of $750 million worth of USDT will move from the Tron (TRX) blockchain to the Ethereum (ETH) protocol.

Tether was largely silent on why it wanted to conduct this swap, a move that has sparked some assumptions in the community. While Tether has conducted these chain swaps for years, it still reassured its community that the total supply of the USDT stablecoin will not decline.

USDT remains the industry's first and biggest stablecoin, with its market capitalization pegged at $83.37 billion. The usage of the stablecoin has skyrocketed over the past few years, and within that time, Tether has made concerted efforts to shift its reserve portfolios in a bid to drive more trust in its ecosystem.

Of the hypothesis being shared as to why the USDT is being swapped, the most logical remains the move to rebalance the liquidity base of USDT on Ethereum by taking from the region of surplus to the region of scarcity.

USDT Issuer Tether Invests in Green Bitcoin (BTC) Mining in Uruguay

Basic ideals of on-chain swapping

In explaining the core ideals of the USDT chain swap, Tether said the majority of the swaps can be completed on trading platforms that have support for the respective chains the user desires. However, for more sophisticated swaps, it may have to step in to help cushion the imbalance in liquidity across the different chains.

Tether has been deemed a very controversial stablecoin issuer, but luckily, the on-chain swaps take place online and can easily be tracked and verified. Tether has made headlines, for a positive reason, as it revealed it recovered about $20 billion in losses earlier this month.

The stablecoin issuer also has a functional partnership with Xapo Bank, which adopted the Tether payment rail in place of SWIFT.

article image
About the author

Godfrey Benjamin is an experienced crypto journalist whose main goal is to educate everyone around him about the prospects of Web 3.0. His love for crypto was birthed when, as a former banker, he discovered the obvious advantages of decentralized money over traditional payments. With his vast experience covering various aspects of Web3, Godfrey's articles has been featured on, Cryptonews and Coingape, among others.