Tether Holdings, the issuer of the world’s largest stablecoin USDT, has decided against launching its own blockchain. Despite possessing the technological capability and financial clout to do so, Tether opted to stay blockchain-agnostic. CEO Paolo Ardoino shared insights into the reasoning behind this decision, citing the simplest principle in economics, which is supply and demand.
In a recent interview with Bloomberg News, Ardoino stated, “We are very good in technology, but I think blockchains will become almost a commodity in the future. Launching a blockchain ourselves might be not the right move. There are very good blockchains.” This acknowledgement from the CEO suggests that Tether prefers to focus on enhancing its existing services rather than entering a market where numerous competitors already offer strong infrastructure.
Why Tether Chose Not to Enter the Blockchain Space
With a $117 billion market valuation, Tether’s status as a leading player in the cryptocurrency field may have made it simple for the business to introduce its blockchain. Given its widespread use in trade and money transfers, USDT is a perfect candidate for its blockchain. The choice to abandon this project, nevertheless, is indicative of how crowded and competitive the blockchain market is.
The information is self-explanatory. DefiLlama reports that of the 306 active blockchains, the top five hold an astounding 86% of the value of all assets locked. With $87.7 billion in Total Value Locked (TVL) out of $133.2 billion across all chains, Ethereum is still in the lead. Another big contender, TRON, controls 49% of USDT’s supply and has $8.1 billion in TVL.
The success of a blockchain depends on its ability to process transactions quickly, affordably, and securely. Although Tether had the option, it decided that its competitive advantage lay elsewhere and avoided entering this market.
Despite its relatively high fees, Ethereum is the market leader because of its first-mover advantage, developer flexibility, and ranking as the home of the second-most liquid cryptocurrency. Tether understood the reasoning quite well. Furthermore, it didn’t need to enter this already competitive market because it could keep growing by utilising previously existing blockchains.
Why is the Blockchain Space a Multichain-Ecosystem?
The blockchain ecosystem has evolved into a multichain environment, with projects finding value in being active across various platforms. According to Angela Ang, senior policy adviser at TRM Labs, “The viability of these blockchains depends on whether they bring unique utilities—such as speed, security, or interoperability—to the ecosystem.” This evolution highlights that the ecosystem no longer depends on one dominant chain but instead values diverse chains for specific use cases.
Ardoino reaffirmed this feeling by saying that Tether is happy with its current blockchain-neutral strategy. According to Ardoino, “blockchains are just transport layers” for them, meaning that Tether will stay on a blockchain as long as it provides high levels of sustainability and security. Tether can prioritise the security of its USDT stablecoin without being dependent on any one chain by remaining adaptive and agile.
USDT Trading Volume Drops
The market responded swiftly to Bloomberg’s news on Tether’s decision. A change in trading activity was indicated by the over 20% decline in USDT’s 24-hour trading volume.
The market’s response demonstrates how unstable and sensitive the cryptocurrency market is to announcements about significant participants like Tether. Nonetheless, it is possible to see Tether’s choice to forgo developing its own blockchain as a calculated strategic move that keeps the business adaptable and laser-focused on its core strengths.
Tether’s choice to stay neutral towards blockchain technology is indicative of a thorough comprehension of the supply and demand dynamics inside the blockchain domain. Tether’s choice not to start its own chain seems to have been well-considered, given that there are already 306 networks in operation and a small number of them hold the lion’s share of market share.