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The Many Ways Tether Leads the Stablecoin Market

Clearly, the growth of the total supply of stablecoins (which has exceeded $120 billion dollars) has caught the attention of many individuals and financial firms alike. However, high-profile failures like Terra have also been a critical part of the surge of attention, including attention from regulators and critics.

The utility of stablecoins is growing daily, which is good for the industry and for adoption. Many industry participants have commented on how the gap between Tether and its largest competitors has narrowed. However, the difference between USD₮’s 24hr trading volume and its competitors tells a clearer and more important story.

For example, rather than catering to the traditional banking industry, Tether is focused on being the most used currency for crypto currency trading and settlements, peer-to-peer exchanges, remittances, a tool of freedom and inflation hedge for developing countries.

This is why, during what's fair to define as the worst black swan event for crypto to date crypto, investors felt pressure to remove their excess cash from crypto.  Since Tether is the gateway for this industry, its marketcap has decreased due to billions of cash redemptions. Tether effortlessly facilitated these redemptions over the past several weeks, while Tether’s 24hr trading volume continues to be roughly 10x that of its closest competitor. This demonstrates the utility of and the demand for Tether in daily trading, a true measure of adoption.

The sheer scale of the integration of USD₮ into the financial plumbing of the crypto industry is an order of magnitude greater than its nearest competitor. This speaks volumes to the confidence the industry and all of its users have, in Tether and USD₮.

USD₮ is the Most Transparent Stablecoin

Tether’s competitors are often portrayed as more “transparent” than Tether and pundits will use this framing to construct a narrative that users choose them over Tether due to these qualities.

It does not reflect reality in any way.

Tether was the first stablecoin to provide attestations to the nature and breakdown of its reserves. Its competitors only provided this same level of transparency once Tether did.

Tether is critiqued for not having an audit, meanwhile, no stablecoin has ever produced an audit.

That will change soon.

Tether is currently preparing itself to go through
an audit
with a major accounting firm, one of the “Big 12” accounting firms.

The first question critics will ask is “Why not one of the Big 4?”. The reason is the Big 4 auditors are highly concerned with reputational risk due to the lack of regulatory clarity around stablecoins, and as such, they are not providing audit services to stablecoins. This is why none of Tether’s competitors has an audit from a Big 4 firm either.

Tether plans to be the first stablecoin to offer an audit into its reserves to the market. We expect that, as always, other stablecoins will merely follow Tether’s lead.

Composition of Tether Reserves

It is important to clarify the rumors being circulated by hedge funds about Tether's commercial paper holdings. The rumors that Tether's commercial paper portfolio is 85% backed by Chinese or Asian commercial papers and being traded at a 30% discount are completely false and aim to spread misinformation that will move the markets in the direction that hedge funds need in order to make a spread.

Tether condemns such attempts which oftentimes see the simplest users take the biggest hit, while few coordinated funds increase their profits.

In its
latest assurance opinion
, Tether announced that over 47% of total USD₮ reserves are now US Treasuries and that commercial paper makes up less than 25% of USD₮'s backing.

Tether can report that its current portfolio of commercial paper has since been further reduced to 11 billion (from 20 billion at the end of Q1 2022), and will be 8.4 billion by the end of June 2022. This will gradually decrease to zero without any incurrences of losses. All commercial papers are expiring and will be rolled into US Treasuries with a short maturity.

You can access our most recent attestation and other information at https://tether.to/en/transparency for the most up-to-date reporting on Tether’s reserves.

Redemptions, DDoS, and the Road Forward

Tether has processed over $14 billion in redemptions since May. Critics have been the first to notice this fact.

However, this is a fundamental attestation to the strength of USD₮ and the quality of Tether’s reserves. Redemptions of a similar size, and of equivalent proportions of total assets, have brought down major banks before.

Most notably, Tether processed a larger proportion of total assets in 10 days than
Washington Mutual did
before its collapse and failure. Critics continue to try to spin the story of redemptions as a weakness. Nothing could be further from the truth.

Tether’s handling of redemptions, and the ongoing stability of USD₮, is nothing but a battle-tested affirmation of the strength, stability, and liquidity of USD₮.

Tether also faced a DDoS attack within the last week. This attack was directed to Tether’s website, not anything related to the functioning of USD₮ on the various blockchains it is issued on.

Websites, and companies, face DDoS all of the time. In 2021 there were
9.7 million DDoS attacks
.

This is business as usual for organizations operating online, especially firms in the public eye.

DDoS attacks on Tether’s website can never have any impact on the stability, liquidity, or redeemability of USD₮.

And during all of this, Tether continues to launch new tokens in its pursuit of financial freedom for people all over the world.

Tether has launched, and is in the process of launching more pegged tokens. Tether launched a
Euro-pegged token
, a
Mexican Peso-pegged token
, and is planning to launch a
British Pound-pegged token
.

The question of marketcap is far from the most interesting, or the most relevant question in evaluating Tether and its mission. Total trading volume, utilization in derivatives and De-Fi, acceptance by merchants, and all of Tether’s other products paint a much clearer picture.

If at any point USD₮ is overtaken in marketcap by any competitor, nothing changes for Tether.

USD₮ continues to be redeemable 1 for 1 with dollars. USD₮ continues to be a highly liquid, highly traded integral financial asset. People around the world will continue to accept USD₮ in markets where dollar access is limited.

And most importantly, Tether continues to advance its mission of promoting financial freedom, inclusion, and the peer-to-peer economic rights of human beings globally. 

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