Tether increases its supply? – Cryptocurrency enthusiasts know well Tether. Her stablecoin USDT needs no introduction. In this context, on June 12 a massive increase of one billion USDT attracted all eyes. But what is it really?
Tether issues 1 billion USDT on Ethereum
On June 12, many Twitter accounts, including Whale Alertrevealed that Tether had just issued no less than 1 billion USDT tokens on Ethereum. Concretely, this represents an increase of 1.2% of the total supply, with more than 83 billion dollars of marketcap.
However, despite appearances, this is not really what happened. Thus, faced with the magnitude of the announcement on social networks, Paolo Ardoinothe CTO of Tether took the speech.
The latter announced that it was a “inventory replenishment” on the Ethereum network. Therefore, he insisted that it would not have no impact on overall USDT market capitalization. In fact, it is a transaction ” authorized, but not issued“. The newly issued amount will serve as inventory for future issuance requests and chain swaps.
“1B USDt inventory replenishment on the Ethereum network. Note that this is an authorized, but not issued transaction, which means that this amount will be used as inventory for next period’s issue requests and channel exchanges. »
Therefore, although the tokens have been issued, it does not mean that they are in circulation in the market.
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A simple liquidity management strategy
As a result, this show is much less sensational than one might think. This one is more part of a liquidity management and anticipation strategy.
Secondly, as explained by Paolo Ardoino these funds will also be used during chain swaps .
In practice, the chain swapsallow traders to move cryptocurrencies from one blockchain to another.
Because of this, Tether frequently collaborates with various cryptocurrency exchanges to help balance the liquidity of USDT across different blockchains.
For example, if a crypto exchange has excess USDT liquidity on the Ethereum blockchain, but a shortage on the Tron blockchain, it can perform a chain swap to switch its Ethereum-based USDT to the Tron blockchain.
In May, a few months after the setbacks of Circle and its USDC, Tether revealed in more detail the reserves that cover its stablecoin. On this occasion,we learned that the company holds $1.5 billion in BTC.
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