What is USDT?
Tether USD₮ (USDT) is a stablecoin built on blockchain technology that aims to keep its value equal to the U.S. dollar. This makes it useful for quick and affordable digital transactions without the usual ups and downs of cryptocurrency prices.
- Stable Value – USDT stays pegged 1:1 to the U.S. dollar, serving as a link between traditional finance and the crypto world.
- Works on Multiple Blockchains – It operates on over 15 blockchains, including popular ones like Ethereum and Tron, making it accessible worldwide.
- Backed by Reserves – Tether claims USDT is fully backed by cash, U.S. government bonds, and other assets, though some debate the transparency of these claims.
Deep Dive
1. Purpose & Value
USDT addresses the problem of cryptocurrency price swings by providing a stable digital dollar. Since its launch in 2014, it has allowed people to send, trade, and hold value without worrying about sudden price changes. Common uses include:
- International Payments – For example, USDT is used in Bolivia for business transactions.
- Trading Liquidity – It supports crypto trading with a monthly on-chain volume of $1.24 trillion as of July 2025.
- Market Safety – During unstable times like the 2023 banking crisis, USDT kept its dollar peg while other stablecoins struggled.
2. Technology & How It Works
USDT isn’t limited to one blockchain. It uses an omnichain approach, meaning it runs on several networks such as Ethereum (ERC-20), Tron (TRC-20), and Solana. Important features include:
- Cross-Chain Movement: USDT tokens can move between blockchains using special methods like locking tokens on one chain and creating them on another (e.g., LayerZero’s OFT standard).
- Speed and Cost Efficiency: Most USDT (about 98% of its $163 billion supply as of August 2025) is on Tron and Ethereum, chosen for their fast transactions and low fees.
- Focus on Active Networks: Tether is phasing out less-used blockchains like EOS and Algorand to concentrate on networks with more activity.
3. Supply and Management
- No Maximum Supply: USDT is issued based on demand and the reserves Tether holds. Over $20 billion new USDT was created in 2025 alone.
- Backing Assets: Reserves include cash, U.S. Treasury bonds ($127 billion as of Q2 2025), Bitcoin, and gold. Tether publishes daily transparency reports, but independent audits are still limited.
- Centralized Oversight: Tether Holdings Ltd. controls issuing and redeeming USDT and managing reserves. The company faces ongoing regulatory scrutiny, including compliance with U.S. laws like the GENIUS Act.
Conclusion
USDT acts as the digital dollar of the crypto world, offering stability, liquidity, and the ability to work across multiple blockchains. Its future depends on balancing growth and speed with regulatory requirements and competition. Can it keep users’ trust while adapting to global rules and new challengers?