Tether Limited Will Swap 1 Billion Usdt From Tron to Ethereum to Meet Demand
On Sep 15, Tether Limited in coordination with a third party will move one billion USDT coins in two tranches from Tron to the Ethereum blockchain as per a tweet on Sep 14. This is the second time in less than 40 days when the issuer is shifting such a humongous amount of coins from Tron.
Ethereum is the Home of DeFi
Tron is a scalable network and is popular for gambling dApps according to a DappRadar report. However, it has been trying to make in-roads in DeFi and recently launched a dApp, drawing demand for its native currency, TRX. Still, the Justin sun-led platform trails Ethereum.
As it is, Ethereum is the bonafide home for open finance dApps.
According to Defi Pulse, there is currently worth over $8.5 billion worth of tokens locked by DeFi dApps. The amount is almost 8X in the last seven months when the total value locked in Ethereum temporarily soared to $1.3 billion in mid-February before tumbling and spiking to spot levels seven months later.
It is the demand of USDT which acts as both a safe haven during periods of high turbulence and for staking in different protocols like Curve Finance and other liquidity pools that can explain the sharp spike in demand. By lending out their USDT, holders can earn above rate interest rates and tokens whose prices track the performance of the pool (its demand).
Overly, the incentivization model adopted by DeFi dApps and the preference of users to swap coins via trustless platforms like Uniswap, fans activity in the pioneer smart contracting network as judged from the network utilization rate of over 95 percent.
High Transaction Fees in Ethereum
While the migration marks the critical role Ethereum plays in crypto circles, the move has been questioned by some. The argument circles on the high transaction fees and how it is boxing out other non-DeFi dApps.
For perspective, transaction fees, Gas, continue to rise reflecting demand. This has forced Vitalik Buterin, the co-founder, to urge users to transact via Layer-2 options like ZK- Rollups.
On the flip side, Tron remains scalable with nearly negligible fees even for its DeFi dApps.
Early, Opium launched a credit default swaps (CDS) against USDT casting doubt on Tether Limited’s solvency as BTCManager reported.