What Exactly Is Tether (USDT)?

Tether (USDT) is a cryptocurrency stablecoin that is backed “100% by Tether’s reserves,” according to its website. Tether (USDT) is a stablecoin, or cryptocurrency with a fixed value.

Tether is used by investors who want to avoid the volatility associated with cryptocurrencies while keeping their funds within the crypto system. 

Tether is owned by iFinex, a Hong Kong-based company that also operates the cryptocurrency exchange BitFinex. 

Tether was launched in July 2014 as RealCoin and rebranded as Tether in November 2014. It began trading in February of 2015.

 Tether, which was founded on the Bitcoin blockchain, now supports the Omni and Liquid protocols, as well as the blockchains of Ethereum, TRON, EOS, Algorand, Solana, OMG Network, and Bitcoin Cash (SLP). 

With a market capitalization of nearly $83 billion as of May 2022, Tether was the third-largest cryptocurrency after Bitcoin (BTC) and Ethereum (ETH) and xwp as well as the largest stablecoin.

Tether’s USDT accounted for two-thirds of Bitcoin exchanges by value in April 2022. 

Understanding Tether

Tether is a stablecoin, a type of cryptocurrency that aims to keep the price of its tokens stable, most commonly by tying it to the price of a traditional currency such as the US dollar. (Tether also issues tokens pegged to the euro, the offshore Chinese yuan, and gold, all of which have a fraction of the market cap of its USDT tokens.)

The peg to a traditional currency, which is often backed by collateral reserves made up entirely or mostly of the pegged currency, is intended to keep stablecoins from experiencing the same price volatility as more speculative cryptocurrencies such as Bitcoin.

Tether’s website contains a daily breakdown of its reserve holdings. USDT reported assets of $81.3 billion as of May 12, 2022. Tether reported 83.74% of its reserves held in cash, cash equivalents, short-term deposits, and commercial paper as of the same date, 4.61% in corporate bonds, 5.27% in secured loans to unaffiliated entities, and 6.38% in other investments including digital tokens.

A stable value encourages the use of stablecoins as a medium of exchange, similar to traditional money. As previously stated, stablecoins have made it easier to speculate in cryptocurrency markets. Stablecoins’ rapid popularity is also due to their use as collateral by decentralized finance like the Poocoin price (DeFi) lending and staking protocols.

Tether’s price briefly fell to $0.96 in May 2022, following the collapse in the value of a different stablecoin, TerraUSD (UST), issued by an issuer unaffiliated with Tether or BitFinex.

Tether tokens quickly recovered to more than $0.99, and Tether announced that it would continue to honor redemption requests that had reached 2 billion tokens on May 12 at a 1-to-1 ratio to the US dollar.

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