Tether Reaches Record Capitalization Amid DeFi Boom
Coin transfers from one blockchain to another are driven by the forces of supply and demand
Does the project have a future and will it follow the path of the Fed
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A lot of events have been unfolding around Tether lately. Stablecoin developers have recently withdrawn billions from the TRON blockchain, with the community blaming the coin for growing fees on the Ethereum network. In addition, the project is still pending litigation with US regulators..
Users of the most popular stablecoin – stablecoins – literally translated from English as “stable” coins – continue to gain popularity in the digital asset market. With … More, they suspect something was wrong and are preparing for a fall in the price of the coin, although Tether itself announces an increase in capitalization to a record $ 15 billion. What is happening with the project today and what to expect in the future, BeInCrypto learned from experts. We challenge three questions:
1. Tether withdraws money from TRON and Ethereum. What is the reason?
2. What is the impact of Tether on the cryptocurrency market, which constantly announces the additional issue of coins. Could Tether Repeat Fed’s Strategy by Filling the Market with Dummy Coins??
3. How do you assess the prospects of the project?
Pavel Shkitin, CEO of Nominex cryptocurrency exchange:
– Indeed, over the past two weeks, Tether managed to make several large transactions and moved funds from the TRON blockchain to Ethereum. There may be several reasons for this. First, the movement of funds may be linked to the growing DeFi marketDecentralized finance (DeFi) is a financial services built on blockchain technology that offer users access to an open, efficient and … More. It’s no secret that more than half of all decentralized finance projects are created on the Ethereum platform. And since there is now a buzz in this sector, it is quite logical to transfer there a large number of coins that will be in demand. Another thing is that the Ethereum network remains congested and transaction fees remain quite high, up to $ 2.6.
Secondly, the transfer of funds may be related to the revision of the Ethereum strategy. I assume that the company is transferring funds to more popular blockchains, which is fully consistent with the project development strategy.
Thirdly, the reason may be quite commonplace. Tether transfers coins to where they are in high demand. That’s all.
Regarding the second question, I believe that the scale of the issue of USDT coins and the scale of the additional emission of real dollars by the Federal Reserve System are simply not comparable. Tether did issue about $ 15 billion worth of coins, but this is a drop in the ocean compared to the trillions of dollars that the Fed issued. Therefore, I believe that there will be no negative result for the entire crypto market from the issue of coins..
It is normal practice for a cryptocurrency project to issue additional coins if they are popular. Namely, the USDT stablecoin is used as a means of payment and is widely used in the DeFi sector. I believe that the additional issue of coins is just the company’s response to the needs of the market.
In my opinion, the Tether project is one of the most sustainable on the market. And the more the market develops, the more widely USDT will be applied. I will use the example of the Nominex exchange. In addition, we give our tournament participants prizes in USDT, as in the most popular and demanded cryptocurrency. I believe that the project will continue to develop, replacing the fiat dollar.
Stanislav Itkin, CEO of ZYX Network cryptocurrency:
– I don’t see anything suspicious about Tether flipping coins from one platform to another. This is most likely a standard USDT transfer from a platform that is less in demand to the more popular one. We’re seeing a DeFi boom right now, so it’s no surprise that the demand for the coin on the Ethereum platform is sky-high. Today more and more projects are trying to integrate with Ethereum, as these are additional opportunities. For example, we are also completing a bridge to the Ethereum blockchain in order to create a unified blockchain network. Thus, our coin can be used by projects built on Ethereum. I am confident that Tether is just strengthening its presence on the Ethereum platform.
USDT is one of the most sought-after stablecoins on the market, so it is quite predictable that Tether will issue additional shares. If we compare the popularity of USDT, then it is slightly inferior to YFI. Now investors are massively buying up not only Bitcoin or ETH, but also stablecoins. Among all stablecoins, token As the use of cryptocurrencies grows, new types of tokens are emerging. They can represent value or something intangible like voices. Two … More Tether pegged to the dollar remains the most popular. I fully share the company’s position on the additional issue. As for the Fed, this is a truly uncontrolled printing of money that can no longer be fully backed by US resources. By releasing “helicopter money” to the masses, America is digging a hole for itself, into which sooner or later it will fall. I think that comparing the activities of Tether and the Fed is not entirely correct.
The prospects of the project have been actively discussed for the last 3 years. Skeptics are foreshadowing the closure of Tether from 2017. Optimists believe that USDT will eventually supplant the fiat dollar. But the project is going its own way. At the moment, USDT is one of the most popular stablecoins, and I think it will remain so for at least the next 3 years..
Tatiana Maksimenko, official representative of the Garantex cryptocurrency exchange:
– It is quite obvious that the decision to swap a billion USDT from the TRON blockchain to the Ethereum network is related to the demand for USDT coins in the Ethereum blockchain. And there demand is driven by the continued growth of the decentralized finance market, most of which use the Ethereum blockchain. I believe that this is not the last swap for Tether, because so far the DeFi market does not show any signs of a possible decline in the near future..
USDT in the cryptocurrency market is a safety island where everyone swims out to wait out the storm, to profitably close positions or minimize losses during a fall. Thanks to USDT, there is quite tangible liquidity in the cryptocurrency market. USDT is convenient by itself for making cross-border transfers. There are a lot of rumors about dummy coins, the scandalous aura around Tether has subsided a little over the past year, and before that, for about two years, there hadn’t been a week without some news about Tether and Bitfinex, everyone was looking for their bank with deposits. I don’t think Tether can repeat the Fed’s strategy. How much emission does Tether have now? Several billion coins? Compared to the Fed’s printed matter, it’s just a ridiculous amount.
Tether remains the most popular stablecoin so far. No USDC or other coins have ever been able to truly compete with USDT. But in the crypto world, everything is developing rapidly and there is always a risk of confrontation with regulators. So for now, USDT is holding on to the market, but we need to monitor their relationship with American regulators..
Vyacheslav Orskiy, KickEX analyst:
– The main reason can be identified as the growing popularity and high hype in the DeFi field, where more and more projects appear that use the Ethereum network, as a result of which the number of transactions is growing. This is reflected in the cost of gas. There is information on the network that this operation was initiated by a large exchange. For example, “TheBlock” is believed to be Binance. As a result, if we consider the situation in this vein, it is logical to transfer part of the volume to the network where there is a tendency to increase the activity of network participants.
Tether can become dummy coins only on condition that no one will use them in their operations. If we look at cryptocurrency exchanges, we will see that most of them have pairs with USDT for which there is a large trading volume. The US dollar acts as a global reserve currency in the traditional asset market, while Tether does the same only within the cryptocurrency market..
As long as there is demand for the dollar in the financial markets, there will be demand for Tether in the cryptocurrency market. Obviously, the Fed’s balance sheet is greatly inflated by US government bonds, which backed the dollar, and Tether, in turn, is backed by the US dollar. But nevertheless, government commitments are backed up by the results of the country’s economy, where we can see an increase in the number of consumers, the creation of new jobs, etc., so call that Tether a “dummy coin” or the same dollar “Dirty green paper”, illogical.
The cryptocurrency market still has a rather low volume and, in principle, it can be compared in terms of capitalization with any top US company, due to the fact that it exists and has not been developing for a long time..
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Of course, with the launch of new stables from other projects, Tether lost some part of the market, but the currency still plays the role of a global reserve currency in the cryptocurrency market, and given the rapid development, it can be assumed that the situation after some time will develop in such a way that, in addition to minutes of the meeting of the US Federal Open Market Committee (FOMC) or the speech of the head of the Fed, we will still follow similar events with Tether Limited.
Harutyun Nazaryan, CEO of Bistox Exchange:
– The transition of Tether from Tron to Ethereum is absolutely logical. The announcement of the $ 1 billion issue on the TRC20 was received with great enthusiasm, but the additional issue of another $ 1 billion on the ERC20 would not have been accepted either. This opened up opportunities for new market experiments and attracting additional audiences. Tether and Bitfinex were developing their project, and therefore at that time this action was logical.
As time passed, Tron turned out to be less in demand, as it became clear that Tron did not have any target load. And after the transition of Ethereum to PoS, Tron will not have a single chance of existence, unless Justin Sun comes up with another “trick for the sake of the trick”, which will also not exist for a long time.
Therefore, the transition from the Tron blockchain back to the second largest blockchain by capitalization is normal. Ethereum’s announced transition to PoS is a huge upgrade and a huge leap for Ethereum, and why not the main currency of the Tether market go to the most important smart contract.
Tether has a key influence on the market. This is the main currency, even though Bitcoin is the main currency in terms of capitalization and the first one on CoinMarketCap – Tether creates a market. If we assume tomorrow that cryptocurrencies such as Bitcoin Cash or Tron will collapse, the market will certainly shake, but it will pass quickly. If Tether crashes, then the market will not recover within 10 years, because it is the main currency on which all trading is based..
To get rid of Tether, today you need to get rid of the influence of centralized exchanges, which is almost impossible. It is for this reason that the main cryptocurrency can afford a large emission. The dollar is backed by the authority of the United States – Tether is backed by the authority of Ifinex Limited and Tether Limited. And the main cryptocurrency has the right to constantly expand. This market will not develop without additional emission.
I believe that Tether should move from private hands to community governance, where companies and states can be located. Then Tether definitely has a chance. If Tether takes the path of independence, then we must not forget that the United States can always launch the electronic dollar and open trading. I know for a fact that the OTC market is now dominated by Tether, not Bitcoin. Those who are now engaged in OTC sales know about it.
Jack Tao, CEO of Phemex cryptocurrency exchange:
– It seems to me that the chain swap could have been triggered by the recent surge in DEFI activity. Stablecoins are widely used in DEFI, providing protection against price volatility of other tokens. In the current environment, Ethereum is developing much more rapidly, and the excitement of cryptocurrency investors is concentrated around new promising projects, and there are much more of them on Ethereum. TRON is still not powerful enough to fully compete with the world’s second largest blockchain network. In any case, JustSwap and Justin’s attempts have yet to convince exchanges to keep Tether on his platform..
Tether is the most famous stablecoin with a current market cap of over $ 10 billion. But his simple promise that every unit is “100% backed” with US dollars has been challenged repeatedly in recent years. Remember in 2019 it turned out that each USDT was backed by just $ 0.74 in cash and cash equivalents? Despite many questions to Bitfinex, USDT clearly dominates the market. Stablecoins are also not without risk, and an additional issue can lead to unnecessary volatility in this case, but such assets are still a convenient tool for hedging.
Traditional finance calls Tether too shady, while crypto maximalists consider it too “traditional.” I consider it necessary. The good thing about centralized projects is that they are fully adapted to the realities of the modern market, and are also convenient and safe to use. Today, stablecoins like USDT are beneficial for both the DEFI ecosystem and daily life. The peg to the dollar makes the system understandable and acceptable to a wide range of users. After all, it’s easier to pay 2 USDT for coffee than 0.00019 BTC. The potential of the project is that the similarity with the traditional financial system allows you to get acquainted with the “risk-free” blockchain, which makes it easier to attract new users to cryptocurrencies. The market needs a project like Tether until we get used to paying for coffee in Bitcoin.
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