Centralization is good – When Tether (USDT) recovers the lost millions


Welcome, centralized universe! – Decentralization is the cornerstone of the crypto ecosystem. However, in some cases, centralization has some advantages, especially when it comes to recovering several million dollars.

$87 million recovered by Tether

Tether is the company behind the USDT stablecoin. In practice, theUSDT is a stablecoin whose value is backed by the dollar. Thus, Tether holds $1 in the bank for every USDT issued.

Therefore, USDT is highly centralized and dependent on the Tether company. A situation that can have both good and bad. Indeed, it is this centralization that has made it possible to avoid the deadweight loss of several million dollars. According to Paolo Ardoino, Tether was able to avoid the loss from a cumulative total of $87 million since its launch in 2014.

Indeed, many users make theerror to send their USDT to the wrong address. For example, in DeFi, it is common to see users sending funds on a protocol’s smart contract instead of the pool’s contract.

Luckily, Tether has a mechanism to recover the funds. First, she puts the address on blacklist and freeze the funds. In a second step, the company reissues the lost USDT for the send back to their original owner.

“To be safe, Tether requires confirmation of ownership, among other information, to initiate recovery. »

Declaration of Paolo Ardoino

Note, however, that Tether only manages losses above 1000 dollars. Obviously, Tether doesn’t do this wholeheartedly and charges for the service. In fact, it costs between $1,000 Where 10% the amount.

“Tether will charge you a fee of up to 10% of the recovery amount or $1,000 (whichever is greater) for recovering Tether tokens. Note: The fee will be deducted from the recovery amount. »

Tether website

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The flip side of the Tether coin

While this feature can be used to help desperate users, it can also serve the interests of regulators. Indeed, Tether can also blacklist certain addresses and freeze the funds there at the request of regulators.

For example, at the beginning of the month, the company has blocked 3 addresses holding a total of 160 million USDT at the request of regulators.

“Tether is complying with a request from law enforcement, imposing a temporary freeze to allow the investigation to continue. »

Paolo Ardoino

So far, USDT has been the stablecoin-king of the crypto markets. However, this market leadership may well be coming to an end, eclipsed by Circle’s USDC. Indeed, USDC’s total supply on Ethereum just surpassed USDT’s total supply.

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