Tether (USDT)

From CryptoWiki
Tether
TypeStable Coin
Total supply3,080,109,502 USDT (7-9-2018) but was 244,951,510 USDT only a year earlier. So the printing press has been on.

Basics

  • Short explanation: Stablecoin where the price equals 1 USD.
  • Longer explanation:

Tether is a cryptocurrency pegged to the value of a US dollar, and is therefore referred to as a ‘stable coin’. This allows it to act as a USD substitute that can be moved between exchanges, instead of traders having to cash out for real dollars.

  • A stable coin anchored to the price of national currencies like the US dollar, the Euro, and the Yen.
  • Tether creates cryptocurrencies whose price are tethered to that of FIAT currencies. Currently supports USD and EUR and will soon add JPY. It therefore acts a safe haven for traders on crypto exchanges.
  • "Tether is using (12-2-2020) Chainalysis' "Know Your Transaction" tool to create risk profiles for USDT users and monitor potentially suspicious activity."

History

  • According to a WSJ report (4-3-2023), companies backing Tether used fake documents and shell companies to help its parent company get into the banking system.
  • Originally called RealCoin.

Audits & Exploits

Bugs/Exploits

"Our internal analysis tool found a bug in Tether Gold contract on April 5th, which allows an attacker to transfer anyone’s XAUt (Tether Gold) token to a predefined address. The team received our report and said they had located this issue internally. Today we found that the issue has been fixed, and we want to share the details."

Governance

Admin Keys

"Tether is a “a centralized stablecoin using blockchains as [a] transport layer,” and that Tether must fulfill its duties working with law enforcement agencies and regulators “regarding potential dangerous behavior.”"

DAO

Treasury

Token

Launch

Utility

Token Details

GBPT

  • Tether is to offer a new sterling-pegged stablecoin, GBPT (23-6-2022).

Coin Distribution

"This indicates that of the total 82.90 billion USDT, 81.84 billion, or over 98%, resides on ETH and TRX.

Presently, the ERC20 version of USDT is held by 4,555,831 unique addresses. The ten leading wallets containing ERC20-based USDT hold a significant 21.38% of the 39.02 billion tether on Ethereum, translating to roughly 8.34 billion USDT.

The wallet labeled “0xF97,” a Binance cold storage address, is at the helm with 2.959 billion tether. Following closely is “0x47a,” another Binance-owned wallet, housing around 1.220 billion USDT. The third in line, “0xA7A,” is Bybit’s property and boasts just over 1 billion tether. The uniquely named “Arbitrum One: L1 Arb – Custom Gateway” address ranks fourth, holding 708.36 million tokens. The fifth-ranking USDT wallet on Ethereum, “0xD62,” belongs to Kucoin, holding 552.4 million tether. Next, the Polygon Bridge, with the address “0x40e,” stands as the sixth largest, containing 438.03 million USDT. The Tether treasury claims the seventh spot with its “0x575” address, holding 422.61 million USDT. Hot on its heels is the Mexc exchange’s wallet, “0x3CC,” overseeing 406.12 million tether as of September 4, 2023. Binance’s “0x28C” wallet ranks ninth, managing 328.05 million tether, while the tenth position, “0xc54,” is held by Okx, controlling just slightly more than 300 million in that wallet. Notably, Okx also holds the 11th, 12th, 13th, 14th, 15th, and 16th largest USDT wallet positions on Ethereum.

On the Tron blockchain, the elite ten wallets encompass 37.61% of the total supply, with Binance reigning supreme by owning the top five Tron-based tether wallets. Together, these five vaults command 14.809 billion tethers. The Tether treasury wallet “TKHu” claims the sixth spot, storing 431.74 million USDT. Kraken operates the seventh largest address, “TTd9q,” overseeing 284.36 million tether. An unknown individual or entity controls the eighth largest Tron USDT wallet, “TRJvQ,” which houses 216.44 million tethers. Similarly, the ninth wallet, “TNiq9,” with 212.92 million tether, and the tenth, “TGtgr,” holding 150.10 million USDT, are both shrouded in mystery because the two addresses are unlabeled."

"All three versions of Tethers [stablecoins] started out 100% concentrated. But USDT-Omni and USDT-ETH have gotten increasingly distributed over time. This could be a signal that they are being used as a medium of exchange, which would explain why supply is flowing from addresses holding large balances to addresses holding smaller balances. The Tron version of Tether (USDT-TRX), however, has stayed almost 100% concentrated, which signals that it is likely not getting much usage as a medium of exchange (however, Tether was only introduced on Tron in May of 2019, so is still relatively new).

Also of note, the USDT-Omni distribution trend reversed and started becoming more concentrated in January 2018, near the peak of the market wide price bubble."

Tech

  • Whitepaper can be found [insert here].
  • Code can be viewed [insert here].

Implementations

Bitcoin

  • $USDT on Bitcoin was 65% of the market a year ago. Today (6-10-2020), it's only 7%.

USDT-ETH

  • Also has an ERC20 version. On August 28, 2019, there are 39,000 tether transactions on the BTC network via Omni, but that number is eclipsed by the 126,000 ETH-based tether transactions. At the time of publication, there’s roughly 1.5 billion USDT minted using the ETH chain and 2.5 billion tied to the Omni Layer network. Update (2-1-2020):

"Last summer, when ERC20 tether transactions flipped the number of USDT Omni transactions, the crypto space took notice. The amount of tether on the Omni Layer at that time (2.5 billion) has since dwindled to just 1.5 billion at press time, with the ETH network currently housing over 2.2 billion tethers on chain."

After Black Thursday it "now accounts for over 50% of the total stablecoin market cap out of the stablecoins that we cover. USDT-ETH market cap has increased by over $660M since March 10th to $3.7B as of March 22nd."

"After integrating with OMG Network, Tether is now planning to add support for another Layer-2 scaling solution — ZK-Rollups."

Tron

"Since the announcement of TRC20 tether in March 2019, USDT supply on the Tron Network has risen to over 900 million tokens. In October 2019, the supply of USDT on the Tron network made up almost 12% of all tethers. Fast forward to January, 2020, and the total supply of Tron USDT is 916,550,610.601 at press time. Given that the supply of USDT across all its various networks is 4,207,771,504, this means that TRC20 tethers now make up nearly 22% of the total supply of tokens."

"Tether will swap $1 billion in USDT stablecoins for the second time in less than a month from the Tron blockchain into the Ethereum network on behalf of an unnamed client."

EOS

  • And an EOS one:

"The EOS network is also home to the stablecoin, and sees tether’s circulating presence there at just over 5 million tokens, with a Bitfinex-managed account holding 88.6% of this supply. Where Tron is concerned, a Binance account is the top holder, and on the ETH network the top holder is Huobi. 

Algorand

BCH SLP

Tether Gold (XAUT)

"XAU₮ is a digital asset offered by TG Commodities Limited. One XAU₮ token represents one troy fine ounce of gold on a London Good Delivery gold bar.

Holders of XAU₮ obtain the combined benefits of both physical and digital assets. XAUt token holders will be able to enjoy ownership of gold while avoiding drawbacks associated with physical gold, such as high storage costs and limited accessibility."

  • Tether Gold has no custody-associated costs, and will be available (23-1-2020) as an Ethereum or a TRON token.

Solana

Hermez

Avalanche

Transaction Details

How it works

"USDT is backed by off-chain assets, but not dollars in the bank; more like a money market fund, but one where you don’t know where it’s investing. The peg management strategy for USDT is dependent on an arbitrage loop for the largest exchanges and OTC desks. Regular users cannot redeem USDT for a dollar in a bank, but large traders can. So when USDT is trading below a dollar – like it was two weeks ago – Alameda, Three Arrows Capital, and other large players are incentivized to purchase USDT in large amounts from DEXs and CEXs, and then redeem for cash through Tether Inc. Peg management also entails taking to Twitter and proclaiming “Tether is fully backed” to inspire confidence among the masses. This is seigniorage plain and simple, with defense of the peg assigned to the cavalry of well-connected crypto traders. It’s not an awful peg management strategy, with USDT trading close to $1.00 now, but it clearly isn’t a winning strategy for stablecoin market cap. Over the last two weeks, USDT has seen heavy outflows, while USDC and BUSD both saw sizable inflows. So it makes sense to hold USDT if you’re a big OTC desk or exchange that gets the seignorage rights for Tether, but not so much for anyone else. High-profile new entrants – perhaps a big American or Asian bank – may come, but USDC, USDT and BUSD are likely to remain the industry stalwarts for fiat-backed stablecoins for the foreseeable future. "

Fees

Upgrades

Interoperability

Other Details

Oracle Method

Compliance

"Now, reversing a transaction on a decentralized blockchain is not usually possible unless you’re able to gain majority hashpower (or stake) over the network. The reason why it’s possible with Tether (and some other ERC20’s on Ethereum) is because the owners of these tokens are able to basically program in admin control or backdoors at time of creation. Because of this, the Tether team can do things like reversing a USDT transaction to help an end-user out. Though the flip-side to this is that they can also arbitrarily freeze USDT located anywhere on Ethereum (in a users wallet, in a smart contract, in an exchange etc)."

  • Froze $33M in Tether stolen in the KuCoin hack (28-9-2020).

"Tether has frozen $1.7 million stolen from yearn.finance yesterday, mitigating some of the $11 million lost in the exploit. The exploiter profited $2.7 million by taking out a flash loan from Aave and manipulating exchange rates in Curve Finance’s 3pool in which Yearn’s v1 yDAI vault was heavily invested.

The exploit was very expensive to pull off; to do it, the exploiter had to pay $3.5 million in liquidity fees to Curve, $3.5 million in staker fees and $1.4 million in fees to Aave, according to a research analyst at The Block, Igor Igamberdiev. Igamberdiev said the exploiter profited 513,000 DAI and 1.7 million in USDT."

  • Most of the auditing issues have been solved now, after two audits proved Tether does indeed have the collateral (13-5-2021).

New York Settlement

"The company behind both the Bitfinex exchange and the stablecoin Tether, iFinex, has ended its nearly two-year battle with New York State. Attorney General Letitia James announced Tuesday morning that Tether and Bitfinex will pay $18.5 million in fines and be required to submit quarterly reports about the state of their operation. They also must stop doing business with “any New York persons or entities”—that’s anyone who regularly trades in New York, and any company that’s headquartered or incorporated in New York. The suit began 22 months ago in April 2019, when James and her office sued iFinex for allegedly using Tether’s USDT cryptocurrency to cover up $850 million in lost funds. For their part, Tether and Bitfinex have not had to admit to any of the wrongdoings outlined in the State’s eight pages of findings. Later on in the document, the OAG writes that for a period of time in 2017 (when Tether was still making the 1-to-1 USD to USDT claim), the company only had $61 million on hand for the 442 million USDT in circulation.

As a response to worries that USDT wasn’t fully backed, Tether released a “transparency update” on September 30, 2017, which included a bank statement showing $442 million in cash. This was “misleading,” according to the findings; the bank statement, dated September 15, may have accurately reflected Tether’s balance, but "the $382,064,782 listed as cash reserves for tethers had only been placed in Tether’s account as of the very morning.”"

Their Other Projects

Keet

  • Tether and cryptocurrency exchange Bitfinex have entered the world of social media, announcing the launch of video chat application named Keet (26-7-2022).

Roadmap

  • Can be found [Insert link here].

Usage

  • As of 8-2019, Tether captures 77% of all BTC trades, 53% of ETH and 54% of BCH trades worldwide.
  • Tether currently (4-2-2020) accounts for about 85% of the total stablecoin market cap. Comparatively, Tether made up about 77% of the market cap on January 1st, 2019.
  • From a Bitcoin.com article (18-10-2019):

"Just 104 tether addresses hold 70% of the stablecoin’s circulating supply, according to an investigation conducted by blockchain intelligence company Intotheblock. Considering tether’s supply and its $1-dollar price, the fiat equivalent is over $2.8 billion."

As IntoTheBlock put it:

- There are 104 addresses that control 70% of the circulating supply
- In the last 7 days, the total volume of large transactions (greater than $100k) was $2.4b
- The avg the token is held: 17.8 days

Competition

Tether and Bitcoin price correlation

  • "The issuance of new tether tokens is helping Bitcoin prices rise, according (4-10-2019) to new research by TokenAnalyst. The company found up to 70% of the time there is an issuance of Tether, the price of bitcoin also rises, a significant discovery when we’re remind there was more than 2 million tether minted this year. The numbers also change depending on which kind of Tether is gonna be minted. It rises 70% of the time there is tether being issued as an ERC20 token, and 50% of the time it is issued on their native Omni chain."

"A paper from UC Berkeley in April concluded that Tether minting is entirely uncorrelated with Bitcoin’s price."

Pros and Cons

Pros

  • Useful as a safe haven when trading when entering a bear market.
  • Most of the auditing claims of below have been solved now, after two audits proved Tether does indeed have the collateral (13-5-2021).

Cons

  • According to a WSJ report (4-3-2023), companies backing Tether used fake documents and shell companies to help its parent company get into the banking system.
  • Tether claims to keep a 1:1 reserve of real US dollars for every USDT released. It has had issues in proving the validity of this claim, which has caused many in the community to become skeptical of the company behind the token.
  • Every USD/EUR/JPY is backed with real currency in a reserve, or at least, so they claim. This has been under scrutiny for years now. So far (9-2018) Tether has not been fully audited by an outside neutral party.
  • “Every tether is always backed 1-to-1, by traditional currency held in our reserves.” used to be written on their website but has since been taken away.
  • Tether admitted that only 74% of its circulating coins were backed by cash and cash equivalents.
  • Accidentally minted and subsequently burned $5B USDT (7-2019) according to Whale Alert; CTO Paolo Ardoino claims a decimal mistake was made during a transfer with crypto exchange Poloniex and Tron; the $5B was burnt almost immediately
  • Bitcoin price seems to be manipulated by Tether issuance.

Team, Funding, Partners

Team

Funding

  • Tether is the lead investor in a funding round for Celsius for $10 million, which wasn’t open to the public. Invested once again when Celsius raised $30 million in an equity round led by Tether at a pre-money valuation of $120 million (2020).
  • Said it had loaned to Celsius as well, but did not lose on it when Celsius went down during the 2022 bear market.

Partners 

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