Tether Takes Significant Steps with Blockchain Modifications for Stablecoin

Tether's Strategic Shift

• Abandonment of Smart Contract Freezing: Tether has decided not to freeze USDT smart contracts on five blockchain networks, allowing token transfers to continue but halting the minting of new USDT tokens. This marks a significant strategic change for the company as it reevaluates its blockchain commitments.

• Impact on Specific Networks: The decision affects users on the Omni Layer, Bitcoin Cash SLP, Kusama, EOS, and Algorand networks. Tether will cease direct token issuance and redemption on these platforms, limiting their support while maintaining transfer functionality.

Focus on Active Networks

• Prioritization of Developer Activity: Tether's revised strategy emphasizes support for blockchains with strong developer engagement, scalability, and user demand. While it is not completely withdrawing from the affected chains, its active support will be significantly reduced.

• Continued Engagement with Major Networks: Tether remains actively engaged with Tron and Ethereum, which have substantial user adoption and practical applications.

USDT Circulation and Market Dynamics

• Current USDT Holdings: Data from DeFiLlama indicates that the Tron network has $80.9 billion in USDT circulation, followed by Ethereum with $72.4 billion, and BNB Chain with $6.78 billion. Other networks like Solana and Ethereum Layer-2 chains also show notable stablecoin activity.

• Expected Impact on Omni Layer: The Omni Layer, with $82.9 million in USDT circulation, is projected to be the most affected by Tether's new strategy, while other networks like EOS, Bitcoin Cash SLP, Algorand, and Kusama have less than $1 million each.

Stablecoin Market Overview

• Market Capitalization Insights: The total market capitalization of the stablecoin sector is currently $285.9 billion, with USDT representing $167.4 billion and USDC at $71.5 billion. Recent legislative support, such as the GENIUS Act signed by former President Donald Trump, is expected to enhance the position of dollar-pegged stablecoins.

• Efficiency vs. Decentralization Concerns: While Tether's withdrawal from less-utilized chains may improve efficiency by consolidating stablecoin systems, some users may perceive this as a setback for decentralization. The GENIUS Act is anticipated to empower U.S.-based stablecoin initiatives, aligning Tether with emerging trends in the market.