Introducing Tether, the most popular stablecoin in crypto

27 Apr 2020 09:00
Independent Reserve team

You may have seen that we recently added Tether (USDT) onto our exchange. It may seem like just another crypto, but there is more to USDT than meets the eye.



What is Tether (USDT)?

Tether is a stablecoin that is designed to mirror the price stability of the US dollar with the speed and transferability of the Ethereum blockchain. Tether is designed so that each USDT is 100% backed by reserves.



What is Tether used for?

The market cap of Tether has more than doubled in the last year and as of April 2020 sits at US$10 billion dollars, making it over 80% of the combined market cap of all stablecoins. As the most popular digital asset pegged to the U.S Dollar, Tether provides a number of unique advantages for individuals, traders and investors:

  1. Transfer of value across national boundaries in seconds rather than days through banks.
  2. Ride out crypto volatility by buying and holding USDT.
  3. Gain exposure to USD by holding USDT instead of converting your local currency (i.e AUD, NZD) to USD.
  4. Exploit arbitrage opportunities across crypto markets more efficiently.



Spectacular growth in adoption

Since its inception in July 2014, Tether has grown to become the 4th largest cryptocurrency by market capitalisation. The growth and demand for Tether has been driven primarily by its ability to provide liquidity and act as a hedge against market volatility when transacting against other digital assets on exchanges.


Tether dominating transfer value on Ethereum

While Tether is issued on both the Ethereum and Bitcoin blockchains, the USDT-ETH token has become the dominant vehicle for Tether. This is due to its significantly faster block confirmations (15-second blocks for Ethereum versus 10 minute blocks for Bitcoin) and lower fees. Such characteristics are desirable for active traders looking to quickly take advantage of arbitrages and other market opportunities across digital asset exchanges.

To highlight the growth of Tether, as well as other stablecoins, a report released by market intelligence firm Messari shows that stablecoins now account for 80% of daily transfer value on the Ethereum network.





What makes this data even more impressive is that value transfer on Ethereum has reached parity with Bitcoin. This growth is driven by the adoption of Tether (USDT) and may make Ethereum the most dominant transfer layer in crypto.





Tether's prominence in Chinese markets

Over the last six to twelve months, over-the-counter (OTC) trading across China has exploded thanks to Tether. According to a recent study by Chainalysis, Chinese spot buyers have started to buy, sell and trade all of their Bitcoin with Tether (USDT) as opposed to Yuan or USD.




Buy, sell and trade USDT on Independent Reserve

Considering getting into USDT? You can now trade USDT from AUD, NZD and USD on our exchange.

Looking to trade A$100,000 or more of USDT? Contact our OTC trading desk.