Author: Suvashree Ghosh, Bloomberg; Translated by: Deng Tong, Golden Finance
Getting off the blockchain bandwagon
In a world where crypto entrepreneurs are rushing to launch blockchains — whether or not there’s a viable use case — Tether has decided not to do so. The reason? Market saturation.
Tether Holdings, the issuer of the world’s largest stablecoin USDT, considered launching its own distributed ledger but later abandoned the plan. Its CEO said the reasoning involved the simplest equation in economics: supply and demand. “We are very good at technology, but I think blockchain will almost become a commodity in the future,” Tether CEO Paolo Ardoino said in an interview. “Launching your own blockchain is probably not the right move. There are a lot of very good blockchains out there.”
Total value locked in top blockchains
Source: DefiLlama, Note: The total TVL of 306 chains is $133.2 billion, including staked assets
For Tether, a company with deep pockets and control of USDT, which has a market value of $117 billion, launching a blockchain might not be a big deal, given the stablecoin’s wide range of uses in transactions and remittances. But that’s not enough reason to do so. The numbers below will explain why.
Data from DefiLlama shows that out of 306 chains, the top five chains control about 86% of the total value of locked assets. Ethereum is the most commercially important blockchain, with a TVL of about $87.7 billion out of a total of $133.2 billion across all chains, making it the market leader, according to DefiLlama. TRON, a blockchain with a TVL of $8.1 billion that was launched in 2017 by cryptocurrency tycoon Justin Sun, handles 49% of the USDT supply. TVL refers to the total value of cryptocurrencies deposited in a protocol.
High speed, low fees, use cases, and strong security are the key factors for the success of blockchain.
Ethereum’s first-mover advantage, the flexibility for developers to build smart contracts, and its status as home to the second-most liquid token are some of the key reasons why it remains dominant despite its high fees.
Angela Ang, senior policy advisor at blockchain intelligence firm TRM Labs, said the blockchain ecosystem has become a multi-chain ecosystem, with builders and issuers finding benefits in being active on a variety of platforms. However, their commercial viability depends on “whether they can bring unique utilities to the ecosystem — whether it’s speed, security, cost, interoperability or something else — that don’t exist today,” she added.
Tether’s Ardoino is happy to remain blockchain “agnostic” as long as its stablecoin has the highest levels of security and sustainability, he said. “For us, blockchain is just the transport layer.”
Tether’s Treasury vs. the Top 10 Money Market Holders
