- USDT has a market cap of $68 Billion with 82% reserve in cash and cash equivalents.
- Tether has cut the commercial paper exposure by $24 Billion. Meanwhile, the CTO of Tether has announced in the past month that they have added $60 Million to reserves.
What Is Stablecoin?
Before understanding the Tether and what makes it the biggest stablecoin in the current market let’s see what is a stablecoin. Since cryptocurrencies are subject to huge volatility daily. Various crypto investors want their gains to be in stable form. Therefore, to “lock in” their gains and as a springboard to cashing out crypto to fiat, many investors have converted their digital assets to stablecoins instead. Stablecoins are relatively pegged to the US Dollar. Many have considered Stablecoins as their safe havens of gains. But the collapse of FTX and UST has taught us something different.
Stablecoins are of relatively three types. 1: Fiat backed(USDT,USDC,BUSD.) 2: Crypto backed(DAI,RSV) . 3: Algorithmic stablecoin:(UST,USDD)
What Makes USDT Big?
Since the dawn of stablecoins USDT has remained the king of the market. It was founded in 2014 under a name of “Realcoin”. The current CEO of Tether is JL van der Velde
It was initially launched on the Omni protocol but made its way to the other blockchains. The current circulating supply of the USDT is around 66.08 Billion and is ranked 3rd in the crypto-verse. The most volume of USDT comes from centralized exchanges which average to $45billion. Tether token is available on various blockchains including Algorand, Ethereum, EOS, Liquid Network, Omni, Tron, Bitcoin Cash’s Standard Ledger Protocol, and Solana. Meanwhile, other stablecoins are present in very few blockchains. The number of authorized USDT on the given blockchain is given in the chart below
All Tether tokens on or off the exchanges are pegged at 1-to-1 with a matching fiat currency and are backed 100% by Tether’s reserves. USDT has been an integral part of various exchanges for the facilitation of users. The current USDT on the exchanges is given in the chart below
What Makes USDT Resilient Of Any Market Conditions?
Since the launch of Tether, many people have tried to blame it for unfair practices and auditing. Tether has time and again proved this by showing their reserves and practicing fair market practices and keeping transparency. Tether aims to cut their commercial paper by zero and put directly in T bills which will be approximately $40 Billion. The current USDT in the Tether treasury is given in the chart below.
Tether reserve is mostly liquid making 82% of the total assets. They are either in Cash or cash equivalents and in short-term borrowings. The current exposure of Tether in Commercial paper is approximately 0.07%
In a recent audit report of Tether on 30th Sep 2022, it has been found that the current assets exceed the liabilities. Meanwhile, all the Secured loans are fully collateralized by liquid assets and constantly monitored and are measured at amortized cost and adjusted for any expected credit loss allowance in line with IFRS 9.
Can Tether Fall?
Since the beginning of Tether, many have failed to bring down the Tether despite their best efforts. Founder of Ethereum Vitalik has also admitted to being critical of Tether but has seen exceeding its expectations in the current market.
Tether currently holds approximately $40 Billion of US T- Bills. This means it would take $40 Billion for Tether to face a liquidity crunch that could be accompanied by government collapse. There does not exist many ways to short stablecoins but can be done through various instruments on wall street.
Tether has maintained its dominance for a long time. Even if there is blood on the streets or a massive panic it would take more than a black swan event like FTX or UST to collapse USDT.