Tether has minted nearly 20B USDT in the last month—a massive acceleration considering it took 8 months to add the same amount earlier this year.

Let’s break down why this is happening and why it might raise some critical questions for the crypto space.

Tether’s Business Model: A Goldmine

Tether’s setup is simple but incredibly effective:

  • 1️⃣ You give them USD.

  • 2️⃣ They issue you USDT.

  • 3️⃣ They invest your USD in US Treasury bonds yielding 4–5%.

  • 4️⃣ They pocket the yield and even add Bitcoin to their balance sheet.

This model generated $1.2B in fees every 90 days, or $4.8B annually. Compare that to BlackRock, which operates in 30 countries with 19,800 employees yet posted just over $2B in operating income for Q3. Tether? It does this with only 150 employees.

The Centralization Dilemma

While Tether’s model is wildly profitable, ignoring the deeper implications is hard. A centralized organization wielding such immense power over the decentralized world of crypto feels… off.

  • Risk: Tether’s dominance introduces a single point of failure for much of the market.

  • Control: The ability to print billions in stablecoins at will conflicts with the ethos of decentralized finance.

  • Transparency: Despite improving, concerns about Tether’s reserve audits linger.

Rethinking Stablecoins: Time for Change?

The current system enriches Tether, not its users.

While USDT holders see stability, the yield generated from reserves goes straight to Tether’s bottom line—not to the people holding the stablecoin.

The risks associated with Tether’s centralized dominance have sparked the emergence of new approaches to stablecoins.

One notable example is Usual, which recently launched on Binance. Usual aims to address key issues like centralization and transparency by offering a decentralized model that shares returns with users—challenging the traditional stablecoin framework.

Here's a more detailed article about Usual in case you are interested: Fixing Stablecoins and Sharing the Profits: Usual’s Vision for Web3

Final Thoughts

Tether’s model is undeniably lucrative, but its rise highlights the need for innovation in stablecoins that align better with crypto’s foundational principles of decentralization and user empowerment.

Do we need a better stablecoin model? Let’s discuss. 👇