Tether Launches Its Flagship Stablecoin USDT On Polygon Network
Stablecoin issuer Tether has launched its flagship coin USDT on Polygon (formerly known as Matic Network), expanding its reach in the crypto market.
Polygon is the 11th blockchain USDT will be available on, after Ethereum, Solana, Avalanche, Algorand, Tron, Omni, EOS, Liquid Network, Kusama and Bitcoin Cash’s Standard Ledger Protocol.
USDT is the most widely-used stablecoin with a market cap of around $72.4 billion.
According to Tether USDT’s launch on Polygon will help the blockchain network’s ecosystem. There are currently more than 19,000 decentralized applications running on Polygon. Their users can now utilize USDT to move money in and out of that ecosystem and to generate yield, Tether detailed.
Polygon saw a huge rise during crypto’s 2021 boom as it welcomed Ethereum-native DeFi applications like Curve Finance and Aave onto its network. Amid soaring gas fees on Ethereum, Polygon’s high-speed, low-cost capabilities made it a popular choice for yield farmers looking to put their capital to work in DeFi. Though yield farmers could previously bridge USDT from Ethereum to Polygon, the stablecoin had not natively launched on the network.
Despite USDT being available across several blockchains, its usage on Ethereum and Tron networks is the highest.
While USDT is available across many blockchains, its usage on Ethereum and Tron is the highest, as can be seen on the chart below from The Block’s Data Dashboard.
One of the key reasons for USDT’s popularity on Tron is because the blockchain is cheaper and faster than Ethereum. Traders use USDT on Tron more for moving money between platforms. But if traders show a preference for products that remain within the Ethereum ecosystem, they might switch to Polygon.
According to Tether, they have plans to launch USDT on more blockchains. Earlier this week, the firm launched a Mexican peso-pegged stablecoin as part of its expansion into Latin America.
The Effect of UST Collapse
The launch rounds off a shaky month for Tether and the stablecoin market at large. The market’s trust in dollar-pegged assets like USDT was put to the test when UST, an algorithmic stablecoin tied to the Terra blockchain, lost its peg to the dollar, resulting in a death spiral that sent Terra’s LUNA token crashing to zero. USDT functions in a different way to UST because it is backed by reserves rather than relying on a dual token mechanism to stabilize its price, but it still suffered from a depeg event in the fallout as panicked market participants began to take flight for cash. Its market cap value shed about $10 billion in the days following Terra’s collapse.
Since the Terra disaster, regulators worldwide have made it clear that they are paying close attention to the stablecoin market, with the Treasury Department’s Janet Yellen calling for hasty regulation of the nascent technology. As the world’s biggest stablecoin living on 11 networks, USDT is now one of the main crypto assets regulators are paying close attention to.
