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Tether, one of the leading stablecoin providers, has authorized the issuance of $1 billion worth of USDT tokens from its Treasury, signaling a move to enhance liquidity for the Tron network. This move comes as the Tron network experiences increased demand for USDT tokens. Tether's Chief Technology Officer, Paolo Ardoino, clarified that this authorization is intended to serve as inventory for upcoming issuance requests and chain swaps within the Tron ecosystem.
Enhancing Tron Network Liquidity
Blockchain tracker WhaleAlert brought attention to Tether's $1 billion authorization, sparking discussions about the purpose behind this move. Paolo Ardoino explained that this authorization is not an immediate issuance but rather a preparation to replenish the Tron network's liquidity in the near future. This strategy aligns with Tether's practice of creating "authorized but not issued" USDT tokens to streamline the issuance process and enhance security.
PSA: 1B USDt inventory replenish on Tron Network. Note this is a authorized but not issued transaction, meaning that this amount will be used as inventory for next period issuance requests and chain swaps.https://t.co/Y1bqxZglgR
— Paolo Ardoino 🍐 (@paoloardoino) September 19, 2023
Securing the Issuance Process
Tether employs the concept of "authorized but not issued" USDT tokens to safeguard the issuance process. By maintaining these authorized tokens in its Treasury, Tether reduces the frequency of accessing private keys, mitigating security risks. These authorized tokens can be issued instantly once customer funds are received, ensuring that Tether maintains full reserves to back its stablecoin.
Tron's Growing USDT Demand
In recent times, the Tron network has experienced significant demand for USDT tokens. This blockchain has become a prominent platform for USDT transactions, with approximately $42.8 billion USDT in circulation. Notably, this surpasses the amount of USDT circulating on the Ethereum blockchain, which stands at around $39 billion. Tether's decision to boost Tron network liquidity aligns with this growing demand.
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| Source: Coinmarketcap |
Tether's Continued Dominance
Tether has consistently maintained its position as the leading United States dollar-pegged stablecoin by market capitalization. In 2023, its market capitalization exceeded $83 billion, with approximately $16 billion in USDT tokens minted since the beginning of the year. This move to authorize additional USDT tokens for the Tron network underscores Tether's commitment to supporting various blockchain ecosystems.
USDC's Market Cap Decline
In contrast to Tether's continued growth, Circle's USDC stablecoin has experienced a decline in market capitalization. Starting the year with a $50 billion market cap, it has decreased to $26 billion at the time of this report. The collapse of Silicon Valley Bank (SVB) is cited as a factor influencing this decline, as Circle had significant funds tied up in SVB when it collapsed in March 2023.
Tether's decision to authorize $1 billion in USDT tokens for the Tron network showcases its commitment to meeting the growing demand for stablecoins on various blockchain platforms. This move is expected to bolster liquidity on the Tron network and further solidify Tether's position as a leading provider of stablecoins in the cryptocurrency market.
