Tether, a prominent issuer of stablecoins, has announced a significant shift in its operational strategy by halting plans to freeze USDT smart contracts across five specific blockchain networks. Instead of outright freezing, Tether will maintain transfer capabilities but will cease the minting of new tokens on these platforms, reflecting a strategic reevaluation on part of the company.
What Does the Strategic Shift Entail?
This new strategy by Tether will affect users on the Omni Layer, Bitcoin Cash SLP, Kusama, EOS, and Algorand blockchains. The company’s decision comes after considering feedback from varied community sectors, leading to the suspension of direct token issuance and redemption on these chains. As Tether reorients its focus, these networks will not receive the same level of official support compared to other chains.
Tether is aligning its resources to support blockchains that display notable developer engagement, scalability, and a high degree of user demand. Although Tether will limit active backing to the selected chains, platforms like Tron and Ethereum will continue to enjoy strong support due to their substantial usage and practical applications.
How Is Tether Performing on Major Networks?
According to data provided by DeFiLlama, the Tron network holds $80.9 billion worth of USDT, followed by Ethereum with $72.4 billion. On the BNB Chain, USDT’s circulation amounts to $6.78 billion. Meanwhile, networks like Solana and Ethereum’s Layer-2 chains, such as Arbitrum and Base, continue to experience enough activity to remain significant, though Circle’s USDC is often the stablecoin of choice there.
The Omni Layer, where $82.9 million in USDT is in circulation, is projected to experience the most significant impact from Tether’s revised strategy. EOS, Bitcoin Cash SLP, Algorand, and Kusama hold less than $1 million each, indicating minimal effect for these networks.
What Does This Mean for the Stablecoin Market?
Recent data from CoinGecko highlight a stablecoin sector market cap at $285.9 billion, with Tether’s USDT comprising $167.4 billion, and USDC following at $71.5 billion. The passing of the GENIUS Act by former U.S. President Donald Trump is thought to strengthen dollar-pegged stablecoins, supporting the dollar’s preeminence as a global reserve currency.
Some users might see Tether’s focus away from less-active chains as a drawback to decentralization, although moving towards more efficient networks could streamline operations. The GENIUS Act is predicted to reinforce U.S.-based stablecoin ventures significantly, making Tether’s alignment with this direction understandable and expected.
“Our decision reflects a strategic move to better employ our resources on platforms with greater community engagement and long-term viability,” said a Tether spokesperson.
Tether’s shift in strategy underscores an emphasis on efficiency and adaptation in a rapidly evolving crypto environment. By prioritizing networks with higher utility and user demand while participating in legislative influences like the GENIUS Act, the company positions itself for robust future growth.
