Tether Token: The World’s First Stablecoin And Third Biggest Cryptocurrency

Tether tokens are the most widely adopted stablecoins, having pioneered the concept in the digital token space. A disruptor to the conventional financial system and a trailblazer in the digital use of traditional currencies, Tether Tokens support and empower growing ventures and innovation throughout the blockchain space. They exist as a digital token built on multiple blockchains.

The tokens are assets that move across the blockchain just as easily as other digital currencies but that are pegged to real-world currencies on a 1-to-1 basis (e.g., 1 USD₮ = 1 USD) and are backed 100% by Tether’s reserves.

Tether to US Dollar – Courtesy of StockCharts.com

Tether tokens are referred to as stablecoins because they offer price stability as they are pegged to a fiat currency. This offers traders, merchants and funds a low volatility solution when exiting positions in the market.

Tether tokens have grown in popularity over the past few years, with a market cap of over US$82.5 billion (as of April 12th, 2022). They allow customers the ability to transact across different blockchains, without the inherent volatility and complexity typically associated with digital tokens.

Tether tokens exist as digital tokens built on various blockchains including:

  • Algorand,
  • Ethereum,
  • EOS,
  • Liquid Network,
  • Omni,
  • Tron,
  • Bitcoin Cash’s Standard Ledger Protocol,
  • and Solana.

Therefore, issuance of Tether tokens is viable on various blockchains with varying capabilities depending on the transport protocol used.

From being the first, to the most used, stablecoin, and one of the most traded tokens by volume, Tether tokens have come a long way. Tether tokens are today the most widely adopted stablecoins across major exchanges, OTC desks, and digital wallets.

There are also some concerns with regards to the stablecoin and one of them is that the crypto does not have big enough reserves to justify its peg to the US dollar.

In May 2021, Tether broke down the reserves for its stablecoin. The firm revealed that only a fraction of its holdings — 2.9%, to be exact — were in cash, while the vast majority was in commercial paper, a form of unsecured, short-term debt.

according to CNBC.

However, according to the Tether website all the tokens are pegged at 1-to-1 with a matching fiat currency and are backed 100% by Tether’s reserves. The value of Tether reserves is published daily and updated at least once per day. Moreover, as part of the Tether’s continued commitment to transparency and trust, Tether Holdings Ltd and its shareholders allocate capital in reserves which are reviewed on a quarterly basis. This liquidity cushion is above and beyond the total market capitalization of Tether tokens (USD₮, EUR₮ & CNH₮) to provide further stability to the Tether ecosystem and assurance to the users.

Courtesy of tether.to, StockCharts, CNBC

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s