Cryptocurrency

Tether CTO clarifies $1B USDT mint on Ethereum is for chain swaps

Stablecoin issuer Tether minted a fresh batch of $1 billion worth of USDT (USDT) on the Ethereum blockchain on June 12. The latest billion-dollar mint for the stablecoin issuer comes within two months of its last mint on April 21.

Tether CTO Paolo Ardoino took to Twitter to clarify that the latest USDT mint is part of what the firm calls “inventory replenish” replenish on the Ethereum network. The latest issuance, however, won’t impact the overall market cap of USDT since the latest minting is an “authorized but not issued transaction.” According to Ardoino, the latest minted amount will be used as inventory for the next period of issuance requests and chain swaps.

A chain swap is a process using which traders can transfer digital assets from one blockchain to another. This procedure enables traders to gain access to the many supporting blockchains for the cryptocurrency they are holding, allowing them to utilize their digital assets on multiple supporting blockchains.

Ardoino explained that Tether periodically works with different crypto platforms to help them rebalance the USDT liquidity across various blockchains. For example, if a crypto exchange has a surplus of USDT liquidity on the Ethereum blockchain and a deficit on the Tron blockchain, where it needs to process withdrawals, the exchange will chain-swap its Ethereum-based USDT to the Tron blockchain.

Related: Tether CTO on USDC depeg: ‘Bitcoin maxis were right all along’ | PBW 2023

Tether has issued a total of over $16 billion in new USDT in 2023, with its current market capitalization of more than $83 billion. USDT’s stablecoin market dominance touched new highs in 2023 when other stablecoin issuers struggled due to regulatory and banking crises in the United States.

Circle-issued USD Coin (USDC), the second-largest stablecoin by market cap, was on the verge of taking over USDT as the largest stablecoin in 2022. However, the prolonged crypto winter added to growing bank runs in the U.S. brought down USDC supply significantly in 2023. Circle CEO Jeremy Allaire blamed the crypto crackdown by the U.S. regulators for the stablecoin’s declining market capitalization.

Tether didn’t respond to Cointelegraph’s requests for comments at press time.

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