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Tether Is Steering Away From Blockchain Race: Here’s Why
Tether Holdings, the issuer of the world’s leading stablecoin USDT, has decided not to launch its own blockchain. Paolo Ardoino, the CEO of Tether, talked about this decision, citing an overly saturated market.
Meanwhile, there is a flurry of new blockchains being introduced in the crypto ecosystem, often without clear use cases.
Tether CEO Believes Blockchains Are Just Transportation Layers
Paolo Ardoino, the CEO of Tether, expressed his perspective in an interview with Bloomberg.
“We are very good in technology, but I think blockchains will become almost a commodity in the future. Launching a blockchain ourselves might not be the right move. There are very good blockchains already,” Ardoino said.
Therefore, the company has chosen to focus on leveraging existing technology rather than adding to the plethora of available platforms. According to Tether, the benefits of launching a blockchain do not outweigh the redundancies it would introduce into the ecosystem.
Consequently, data from DefiLlama supports this cautious approach – out of 307 chains, the top five account for approximately 86% of the total value locked (TVL). Notably, Ethereum (ETH) leads with a TVL of about $50 billion and dominates the market with a 57% share.
Read more: 9 Best Blockchain Protocols To Know in 2024
Tether’s existing integration into major blockchains like TRON, which handles 49% of USDT’s supply and holds $8.1 billion in TVL, shows the viability and strength of existing infrastructures. TRON, founded by crypto mogul Justin Sun in 2017, highlights the competitive environment in which new blockchains must operate.
Ardoino’s strategy for Tether is to remain blockchain “agnostic,” focusing on the highest levels of security and sustainability for USDT, irrespective of the platform it utilizes.
“For us, blockchains are just transport layers,” Ardoino remarked.
However, Tether has not slowed down its pace in innovating within the stablecoin sector. Earlier this week, it announced the upcoming launch of a stablecoin pegged to the United Arab Emirates Dirham (AED).
The new token is set to be fully backed by liquid reserves based in the UAE. It aims to provide a stable and cost-effective digital asset for international trade and remittances while reducing transaction fees and offering a hedge against currency volatility.
Read more: A Guide to the Best Stablecoins in 2024
Furthermore, the company is seeking to expand into diverse sectors, including artificial intelligence (AI), biotechnology, and telecommunications. Not to mention, Tether reported $5.2 billion in net profits for the first half of 2024, providing substantial financial resources for its expansion initiatives.
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