Tether - USDT
Tether (USDT) is a cryptocurrency stablecoin pegged to the U.S. dollar and backed "100% by Tether's reserves," according its website.Tether is owned by iFinex, the Hong Kong-registered company that also owns the crypto exchange BitFinex.
Tether was launched as RealCoin in July 2014 and was rebranded as Tether in November 2014. It started trading in February 2015. Originally based on the Bitcoin blockchain, Tether now supports Bitcoin's Omni and Liquid protocols as well as the Ethereum, TRON, EOS, Algorand, Solana, OMG Network, and Bitcoin Cash (SLP) blockchains.
As of May 2022, Tether was the third-largest cryptocurrency after Bitcoin (BTC) and Ethereum (ETH), and the largest stablecoin with a market capitalization of nearly $83 billion. In April 2022, Tether's USDT accounted for two-thirds of exchanges out of Bitcoin by value.
The peg to a traditional currency, often backed by collateral reserves made up entirely or mostly of the pegged currency, is meant to ensure stablecoins aren't subject to the same price volatility as more speculative cryptocurrencies like Bitcoin.
Tether updates a breakdown of its reserves holdings daily on its website. As of May 12, 2022, it was reporting assets of $81.3 billion for USDT. As of the same date, Tether reported holding 83.74% of its reserves in cash, cash equivalents, short-term deposits and commercial paper, 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 promotes the use of stablecoins as a medium of exchange like conventional money. As noted above, in practical terms, stablecoins have made it easier to speculate in cryptocurrency markets. Their rapid growth in popularity is also the result of stablecoins' use as collateral by decentralized finance (DeFi) lending and staking protocols.
In May 2022, Tether's price briefly fell to as little $0.96 following the collapse in the value of a different stablecoin, TerraUSD (UST), from an issuer not affiliated with Tether or BitFinex.9 The price of Tether tokens quickly rebounded to more than $0.99 and Tether said it was continuing to honor redemption requests that reached 2 billion tokens on May 12 at a 1-to-1 ratio to the U.S. dollar.