Tether just released $1 billion in Tether (USDT) on the Ethereum blockchain as part of its “replenishment” strategy. This is the second $1 billion issuance in less than two months for the market’s leading stablecoin issuer.
A new issue to facilitate exchanges between blockchains
Tether is certainly the largest issuer of stablecoins on the market, but its dominant position is often controversial. The company is regularly criticized and raises doubts about its bookings.
In an effort to maintain its leadership, Tether has implemented a “replenishment” strategy aimed at strengthening its reserves. In April, the stablecoin issuer already issued a billion USDT on the Ethereum blockchain as part of this strategy.
He has issued another billion from the stablecoin, which has failed to cause further controversy. In fact, some see this new issuance of USDT as a catalyst for the increased demand for cryptocurrencies.
However, Paolo Ardoino, the company’s technical director, declares that these new USDTs were produced with the aim of facilitating exchanges between the different blockchains. The purpose of this issue was therefore to support the functions of cryptocurrency exchanges.
Mr. Ardoino clarified that this was an authorized transaction, but not issued. This means that the amount will not count towards the total market capitalization of the company.
Also read: Tether would have 1.5 billion dollars in bitcoin reserves according to BDO Italia!
A strategy to rebalance the exchanges USDT stock
Tether has established strong partnerships with various hedge funds and exchanges. These collaborations allow issuer partners to rebalance their USDT stocks across different blockchains, providing greater flexibility in managing digital assets.
For example, most of their USDT tokens may be exchanging on the Tron blockchain, but withdrawals need to be processed on Ethereum. In such cases, the third parties involved request a swap procedure between the blockchains to facilitate the smooth transfer of tokens.
The inter-blockchain swap procedure converts USDT tokens from a particular blockchain into tokens compatible with another. This guarantees interoperability and continuity of transactions. This process also ensures security and transparency, as it is carried out according to established protocols and standards.