Tether minted $1 billion worth of its USDT on the Ethereum blockchain on June 12, 2023.
This is the second mint that tether justified it to be for chain swaps.

Tether has minted a fresh batch of its stablecoin USDT worth $1 billion nearly two months after its first mint of similar worth. The first $1 billion mint was on April 21, and the second was on June 12. 

1,000,000,000 #USDT (1,008,235,000 USD) minted at Tether Treasuryhttps://t.co/EMkzybOauN

— Whale Alert (@whale_alert) June 12, 2023

The company’s chief technology officer Paolo Ardoino announced on Twitter that the second mint is part of the company’s “inventory replenish” on the Ethereum network. The issuance will be an inventory for the next period’s chain swaps and issuance requests. He quickly noted that the mint would not affect the overall market cap of the stablecoin. Ardoino defined the mint as an “authorized but not issued transaction.”

PSA: 1B USDt inventory replenish on Ethereum 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) June 12, 2023

What is a Chain Swap?

A chain swap is a trading technique that transfers digital assets from one blockchain to another. The process allows the traders to access other blockchains for the digital assets they hold, letting them exploit their resources on multiple blockchains. 

Ardoine explained that Tether often works with different exchange platforms to ease rebalancing USDT liquidity across multiple blockchains. For instance, if a particular exchange has surplus USDT liquidity on the Tron blockchain and a deficit on the Ethereum blockchain, where the exchange needs to process withdrawals, it will chain-swap its Tron-based USDT to the Ethereum blockchain.

Stable Coin Are Struggling With Regulations and Crypto Winter

Tether has a current market cap of more than $83 billion and has minted over $16 billion worth of new USDT in 2023. The stablecoins market dominance has unlocked new highs this year as other stablecoin issuers are struggling due to banking and regulatory crises in the US. 

The Circle-issued USD Coin has the second-largest market cap share on the American market and threatened to upset USDT’s market dominance in 2022. However, USDC’s market confidence has been essentially let down by the prolonged crypto winter and the collapse of the American banking system. 

USDC market cap had nearly halved by April 2023 after a series of regulatory crackdowns and the banking crisis. The firm’s CEO, Jeremy Allaire, said that the unstable regulatory crackdown by the American government had been the leading contributor to the alarming decline. 

The stablecoin suffered a significant blow after the fall of Silicon Valley Bank, which held  $3.3 billion worth of USDC reserves.

2/ Like other customers and depositors who relied on SVB for banking services, Circle joins calls for continuity of this important bank in the U.S. economy and will follow guidance provided by state and Federal regulators.

— Circle (@circle) March 11, 2023

Tether, however, has managed to stay on top despite the challenges and had a $700 million profit in Dec. 2022. The recorded yield enhanced its consolidated assets to $67.04 billion and consolidated liabilities to $66.08 billion, making its excess reserve around $960 million.

Ardonio had projected that the company would close Q1, 2023, with a profit of $700 million, and the reserve will have a total of $1.66 billion, making the first time the excess reserve will hold over $1 billion. USDT’s Q1 2023 assurance report stated that the stablecoin had a profit of  $1.48 billion, a little shy of Ardonio’s projection.

 

 

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Filed under: Bitcoin - @ June 13, 2023 11:27 am