On November 11, Tether CEO Ardoino announced through a post on X that Tether’s Treasury had minted 2B USDT on the Ethereum Network to replenish its inventory. Ardoino disclosed that the USDT was authorized but not issued and would be used for chain swaps and issuance on the next request(s).
The stablecoin issuer announced on November 6th that it would coordinate with a third-party major exchange to perform a chain swap. Tether was converting part of its USDT cold wallets from five different blockchains to USDT on the Ethereum blockchain without changing the amount of USDT’s total supply. In particular, Tether consolidated 1B USDT from Tron, 600 M USDT from Avalanche, 300 M from NEAR, 75 M USDT from CELO, and 60 M USDT from EOS, all to the Ethereum blockchain.
2B USDT minted on ETH amid Tether’s big shift to boost liquidity
PSA: 2B USDt inventory replenish on Ethereum Network. Note this is an authorized but not issued transaction, meaning that this amount will be used as inventory for next period issuance requests and chain swaps.
Also context: https://t.co/3Ps3qUxsBq
— Paolo Ardoino 🤖🍐 (@paoloardoino) November 11, 2024
The Tether Treasury minted 2 billion USDT on the Ethereum network, sparking speculation within the crypto community. The single-transaction reallocation of USDT from different blockchains was part of its strategy to boost liquidity on a platform with more Ethereum activity.
Whale Alert first flagged the transaction, which Tether’s CEO Paolo Ardoino confirmed later. Many analysts and crypto traders speculated about the implications of this reallocation, which came during a time when bullish Bitcoin was surging to successive record highs.
Ardoino took to X to explain the delayed minting notification, saying that the chain swaps were not meant to increase the token’s supply but rather to optimize liquidity. He added that the swaps aimed to meet the growing demand on the Ethereum Network.
Reportedly, the scale of this swap was noteworthy and reflected broader trends in the crypto space. According to Coingecko’s data, Tether’s liquidity soared to over $160 billion.
Coingecko also showed that USDT was still the main source of liquidity in both centralized and decentralized markets despite a slight decrease in USDT’s total supply by 0.3 billion. The data revealed that nearly 85% of USDT’s total supply was available for trading. Increased trading volumes highlighted USDT’s critical role in facilitating high-volume trading.
Tether responds to future and current market demands
Coingecko’s data confirmed the USDT’s position as the leading stablecoin even as Cirle’s USDC continued to gain popularity. The data also revealed that the USDT’s consolidation into the Ethereum network positions Tether to deal with future market dynamics more effectively.
Tether’s latest report showed that the company posted a $2.5 billion profit in Q3, cementing USDT’s financial robustness. The company’s USDT reallocations supported its commitment to maintaining over-collateralization with fiat or fiat-like assets.
On the flip side, smaller blockchains would likely experience reduced liquidity, potentially impacting projects dependent on those ecosystems. According to Tether, the concentration of USDT on the Ethereum blockchain could lead to higher gas fees due to peak-time network congestion.
The USDT issuer also confirmed that the massive chain swaps were more than a routine liquidity adjustment, emphasizing that the strategic realignment reflected shifting crypto market tides. According to Tether, USDT’s dominance in certain ecosystems had been challenged by competitors like USDC, which was growing on niche chains.
